Sensex climbs 374 points on buying in Reliance, ICICI Bank

Benchmark BSE Sensex climbed 374 points on Thursday, drawing support from moderation in crude oil prices and buying in heavyweights Reliance Industries and ICICI Bank. After trading in the positive territory throughout the day, the 30-share Sensex closed higher by 373.76 points, or 0.48 per cent, at 78,954.76. As many as 11 Sensex components closed higher, 16 with losses and three remained unchanged.

The broader NSE Nifty traded in a narrow range during the day and closed marginally higher by 11.35 points, or 0.05 per cent, at 24,636. During the day, the benchmark hit a high of 24,677.05 and a low of 24,604.15.

Since Monday, both the benchmark indices have been facing divergence after stock exchanges introduced a new auction mechanism for shares having futures and options (F&O) contracts.

From the Sensex pack, Reliance Industries climbed 3.43 per cent, the most among the blue-chip firms. State Bank of India, Bharat Electronics, ICICI Bank, Eternal and Titan were also among the major winners.

Power Grid, Tata Consultancy Services, InterGlobe Aviation and Mahindra & Mahindra were among the laggards.

State-owned Power Grid Corporation of India declined 3.99 per cent after it reported a marginal year-on-year dip in consolidated net profit to `3,598.42 crore in the June quarter.

“Indian equity markets ended the session on a mixed note, with the benchmark indices displaying a notable performance divergence even as investor sentiment remained cautiously constructive amid continued optimism over a potential diplomatic resolution to the Middle East conflict,” Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, a Research Analyst firm, said.

The Nifty traded within a narrow range and finished largely unchanged, while the Sensex posted a modest gain, supported primarily by strength in a heavyweight constituent, he said.

“Four sessions into the NSE’s Closing Auction Session (CAS), the divergence between the Sensex and the Nifty is increasingly reflecting differences in market liquidity rather than a transitional anomaly. The same 20-minute closing auction continues to produce contrasting outcomes for the two benchmarks because institutional order flow is concentrated more heavily in Nifty constituents than in the Sensex basket. As a result, the Nifty’s closing level remains more sensitive to auction-driven price discovery, while the Sensex has been relatively less affected,” he added.

The Closing Auction Session (CAS) in the equity cash segment became operational on Monday, introducing a new auction-based mechanism for determining the closing prices of eligible stocks in a move aimed at making the price discovery process more transparent and robust.

Broader markets also closed with gains as the BSE SmallCap Select index climbed 0.89 per cent and MidCap Select index edged higher by 0.14 per cent.

Among sectoral indices, PSU Bank jumped 2.13 per cent, followed by Capital Goods (1.29 per cent), Energy (1.14 per cent), MidSmall Private Banks Quality Tilt (0.97 per cent), Bankex (0.86 per cent), Industrials (0.83 per cent) and Top 10 Banks (0.73 per cent). Realty dropped 1.42 per cent, while Services (1.13 per cent), Metal (0.79 per cent), Insurance (0.74 per cent) and Power (0.69 per cent) also closed lower.

Brent crude, the global oil benchmark, was marginally up by 0.09 per cent at USD 79.52 per barrel.

“Markets drew support from the moderation in crude oil prices, aided by intensified diplomatic efforts to restore regional stability and normalise shipping activity through the Strait of Hormuz. The positive sentiment was further reinforced by the RBI’s steady policy stance and constructive growth outlook, prompting selective buying in heavyweights, banking and energy stocks,” Vinod Nair, Head of Research, Geojit Investments Limited, said.

The Reserve Bank of India on Wednesday maintained a status quo on its benchmark policy rate for the fourth consecutive meeting and retained the stance as “neutral”, with Governor Sanjay Malhotra saying the next move of the central bank on interest rates, as well as policy stance, will be data-dependent.

The six-member Monetary Policy Committee unanimously voted to keep the policy repo rate unchanged at 5.25 per cent, and opted to wait for more clarity on whether higher energy costs in the wake of the West Asia crisis feed into broader inflationary pressures.

The central bank marginally raised the GDP forecast for the current fiscal to 6.7 per cent while slightly lowering the inflation projection to 5 per cent.

“The introduction of the closing auction session from August 3 is one of the most significant structural reforms in India’s equity markets in recent years. The objective of this mechanism is not to influence market direction, but to strengthen price discovery by determining the closing price through a transparent auction that reflects the true balance of demand and supply,” Ponmudi R, CEO - Enrich Money, said.

Today marks the fourth trading session under the new framework, yet we continue to witness a wider-than-usual divergence between the two benchmark indices, he said.

“The Sensex closed higher by 0.48 per cent, while the Nifty-50 ended almost flat with a gain of just 0.05 per cent. Such divergence should not be interpreted as a disconnect in market fundamentals or investor sentiment. Instead, it reflects the market’s ongoing transition to the new closing price discovery process,” Ponmudi added.

In Asian markets, South Korea’s KOSPI tanked 4.58 per cent, Hong Kong’s Hang Seng index declined 1.49 per cent and Japan’s Nikkei 225 ended 0.93 per cent lower. Shanghai’s SSE Composite index ended marginally higher.

Markets in Europe were trading higher. US markets ended mostly lower on Wednesday.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 943.42 crore on Wednesday, according to exchange data.

On Wednesday, the Sensex rose by 152.05 points, or 0.19 per cent, to settle at 78,581. The Nifty edged up 9.75 points, or 0.04 per cent, to end at 24,624.65.