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Domestic indices were trading positive on Tuesday tracking firm global cues after Dow Jones hit fresh record highs as Wall Street discounted outcome of Italy’s referendum. Back home investors hope for a rate cut as monetary policy committee meet starts later today.
Sensex rose as much as 100 points in early trade led by gains in realty, IT, power and capital goods sector indices while Nifty50 continued to hold 8,150 levels.
At 11:24 am, the S&P BSE Sensex was trading at 26,467, up 118 points, while the broader Nifty50 was quoting at 8,165, up 37 points. Among broader markets, BSE Midcap was up 0.81% while BSE Smallcap gained 0.66%.
"Short covering has potential to challenge 8,280 again or see 8,580, but only in a highly optimistic scenario, though the challenge today would be to protect the downsides, while keeping an eye on upside possibilities. A turn lower again and penetration of 8,070 could bring the downside of 7,800 back into the radar," said Geojit BNP Paribas in a technical note.
Meanwhile, on Monday, foreign institutional investors were net sellers with net equity sell value of Rs 317.85 crore, while domestic institutional investors bought equities worth Rs 163.64 crore, provisional data available with BSE suggested.
Also, Gold prices fell to its lowest in 10 months on Monday as global equities strengthened. It posted its biggest monthly drop in more than three years after Donald Trump won the US Presidential elections.
Sectors and Stocks
Adani Ports gained 1.06% after reports that its plan to build one of the world's largest coal mines in Australia got a major boost as it secured final approval for part of a rail link to service the planned mine.
Among other gainers HDFC was up 1.67% as S&P BSE Finance rose 0.59%. Other gainers included GAIL (1.28%), NTPC (1.26%) and ONGC(1.08%).
BSE Realty was the top sectoral gainer followed by oil & gas, power and capital goods.
Among losers, HUL and ITC were down close to 1% on BSE Sensex.
Among other stocks, Tata Power gained over 3% after its Strategic Engineering Division (SED) won a Rs 200 crore order from the Defence Ministry for supplying one regiment of command post and launcher of Pinaka multi rocket launch system.
Monetary Policy Committee review starts today
Almost a month after demonetisation, RBI will have its bi-monthly policy meet when the market is expecting a cut. Two out of the 12 economists, bond market dealers and rating agency officials polled by Business Standard say RBI will go for at least a 25 basis-point cut.
The economic slowdown due to demonetisation is expected to shave off a percentage point from the gross domestic product growth and so a rate cut at this point to encourage private-sector loan off-take and spending will be needed. However, the US Federal Reserve is highly likely to increase its policy rate in mid-December. If that happens, the interest rate differential between India and the US will narrow, making it unattractive for investors to put in money here.
Oil prices down 1%
US crude fell more than 1% to $51.26 after 19% rally post Opec agreement last Wednesday to curb production. WTI crude initially rose and then began to pare gains and retreated to as low as $51.11 a barrel. Brent settled at $54.94 a barrel, up 48 cents - or 0.88 per cent - before retreating to $54.22 a barrel.
Global Markets
Asian stocks posted their biggest rise in two weeks on Tuesday and the euro steadied as investors judged the selloff after Italy's referendum was overdone, with robust U.S. economic data also helping sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan bounced 0.8%, its biggest daily rise since Nov. 22, breaking two days of falls. Korea climbed 1.2% while Japan rose 0.8%.
China’s CSI300 index rose 0.08% to 3,472.54 on Tuesday morning. Japan’s equity benchmark Nikkei rose 0.38% to 18,343.50. Other Asian indices, Hong Kong’s Hang Seng rose 0.78%, South Korea’s Kospi gained 1.06% and Taiwan’s TWSE was up 1.06%. SGX Nifty was trading 1 point down at 8,170 in early trade.
Wall Street rose on Monday, with the Dow Jones industrials setting fresh record highs following a services sector report that showed further strength in the domestic economy.
