Ignoring Yuan worries the benchmark BSE Sensex rebounded after days of sustained selling and reclaimed the 28,000-level, rising 518 points on Friday when it witnessed a deflationary trend after the announcement of sharp fall of WPI inflation for July. Marking its biggest single-day rise in nearly seven months, the rally gathered steam after it became clear that the Government is determined to stick to its April 2016 GST rollout deadline despite protests from the Opposition.
Wholesale price index-based inflation fell to (-) 4.05 per cent in July, from (-) 2.40 per cent in June. The latest set of numbers followed data earlier this week which showed that retail inflation fell in July, which rekindled hopes of a possible rate reduction from RBI.
“Indices staged a stellar show on the back of buying interest till the last leg of trade. July WPI contracted for ninth straight month and cooling of CPI inflation fuelled the rate cut expectations that RBI Governor may cut rates before its policy in September,” said Gaurav Jain, Director, Hem Securities.
A pause in rupee’s slide contributed to the upside. Sentiment went up a few notches after the MSCI’s quarterly index rejig, which is expected to lead to more inflows into Indian markets.The 30-share barometer hit the day’s high of 28,100.64, before settling at 28,067.31, up 517.78, or 1.88 per cent, its biggest single-day rise since January 20.
The NSE Nifty retook 8,500 to hit a high of 8,530.10 and ended the day at 8,518.55, higher by 162.70 points, or 1.95 per cent, its biggest single-day percentage gain since January 15.Of the 30 Sensex pack, 28 turned green as 2 ended in the red. Sector-wise, the BSE realty index jumped the most followed by banking, auto and healthcare.
Asian markets ended mixed on Friday as European stocks were ruling higher as Parliamentary voting began for Greece’s third bailout from its foreign creditors.ICICI Bank was one of the top gainers (up 3.58 per cent) while SBI, HDFC, HDFC Bank and Axis Bank advanced. Vedanta gained the most, followed by RIl, Bajaj Auto, and Bharti Airtel. Buying activity by retail investors rubbed off on mid-cap and small-cap indices, which ended higher with gains up to 2.36 per cent.
Foreign portfolio investors (FPIs) net sold shares worth Rs625.90 crore on Thursday, provisional exchange data showed. “Today local equities traded positively for the day as value buying was seen in the market. Also, better-than-expected WPI data further improved market sentiment and helped indices add over almost 2 per cent during the day,” said Pramit Brahmbhatt, Veracity Group CEO.
The market breadth turned positive as 1,790 stocks closed higher, 1,054 finished lower while 99 ruled steady. Total turnover rose to Rs3,231.37 crore from Rs3,083.18 crore on Thursday.“No further devaluation of the yuan was announced today and this provided an essential break to sectors like metal, chemical, textiles and export-oriented companies from the fall. Additionally, pharma stocks can benefit from the devaluation of yuan,” said Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services.