Strong cues from the European markets helped the Indian benchmark indices record fresh highs on Thursday. The 30-share Sensex on the Bombay Stock Exchange and the broader 50-share Nifty on the National Stock Exchange reversed intra-day losses to close at the highest level in the last two-and-a-half years. The Sensex, meanwhile, managed to close above the psychological mark of 18,000 for the first time since February 19, 2008.
According to market experts, the gains were primarily on account of the strong opening of the European bourses, where investor sentiment revived after an impressive growth in the services and manufacturing data. The strong growth numbers also helped the market allay fears of a slowdown in the US economy on account of statements made by Federal Reserve Chairman Ben Bernanke. Not surprisingly, the Indian bourses were trading in the red during the first half of the trading session on Thursday.
By the end of the trading session, the Sensex had gained 135.92 points or 0.76 per cent to close at 18,113.15. The Nifty ended the day at 5,441.95, up 42.60 points or 0.79 per cent. The overall market breadth was also slightly positive, with 1,546 gainer stocks outpacing 1,362 losers on BSE.
Almost all of the leading European indices gained in excess of 1 per cent on Thursday. FTSE 100 was trading higher by 54 points or 0.13 per cent at 6pm IST. Germany’s DAX gained 1.63 per cent or nearly 100 points, while the benchmark indices of Austria, Belgium, France and Netherlands were also trading higher in the range of 1-2 per cent each.
According to the latest data, growth in Europe’s services and manufacturing industries unexpectedly accelerated in July with the easing of concerns over the debt crisis. According to reports, the bank stress tests results, which would be published today, are also being keenly watched as it will prove whether the euro can withstand the fallout from the Greece-led turmoil. European Union regulators are relying on the exams to reassure investors about the health of financial institutions from Germany’s WestLB AG to Spanish savings banks, say reports.
These factors, according to market experts, helped in lifting investor sentiment that were in the doldrums, post the gloomy outlook statement by Bernanke. “We recognise that the economic outlook remains unusually uncertain. We will continue to assess ongoing financial and economic developments and remain prepared to take further policy actions as needed,” he had said on Wednesday.
Meanwhile, the positive sentiment on the Indian bourses were further aided by impressive corporate numbers released by sector heavyweights, including ITC.The first quarter net profit of the country’s largest cigarette maker jumped nearly 22 per cent at Rs 1,070 crore.
Some of the index heavyweights that gained ground on Thursday included Tata Motors, Bharti Airtel, SBI, ITC, DLF, HDFC Bank and ICICI Bank. Provisional data also showed that foreign institutional investors (FIIs) net bought shares worth nearly Rs 175 crore on Thursday.
Interestingly, NSE’s volatility index, India VIX, declined for the third straight session on Thursday. It lost 5.5 per cent to close at 18.90. The index is a measure of market’s expectation of volatility over the near term.
