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Domestic stocks made a strong rebound on Monday amid reports that the US and China were negotiating to avoid any escalation of the ongoing trade war.
Trader activity too was visible ahead of the expiry of futures and options contracts in the truncated trading week.
Indian stock markets ended higher on Monday with Sensex posting a complete recovery from Friday’s wipeout as concerns over US-China trade war eased after the United States approached China to settle down trade imbalances which steered a value buying in equities from Europe to Asia. The S&P BSE Sensex retook the 33,000-mark within a day after the benchmark index slipped to a level of 32,596.54, meanwhile, Nifty 50 also regained the psychological mark of 10,000 after diving to a low of 9,998.05 on Friday. The domestic markets witnessed a sharp slide on Friday with Sensex and Nifty tumbling to their respective 6-month lows after US President Donald Trump imposed tariffs on Chinese imports which triggered a panic among investors on worries of a trade war.
The 30-share barometer Sensex rose 469.87 points or 1.44% to finish at 33,066.41 whereas the wider share indicator Nifty surged 132.6 points or 1.33% to conclude at 10,130.65 on Monday. Amid the European region, Britain’s FTSE index recoiled from its 15-month low as fears of full-blown trade conflict between the world’s two biggest economies — the United States of America and the People’s Republic of China — seemed to have mitigated, according to a Reuters report. The United States has contacted China seeking measures to reduce their trade imbalance, Reuters reported citing an unidentified report. During the day, Sensex advanced as much as 518.87 points to a day’s high of 33,115.41.
BSE Midcap and smallcap indices too closed the day higher, closing 1.19 per cent and 0.73 per cent up, respectively.
Fear gauge India VIX eased 2.28 per cent to 15.19 ahead of March series futures & options expiry on Wednesday.
Going by the buzz on Dalal Street, here’s a look at top factors that influenced market on Monday.
Market sentiment improved after reports suggested that the United States and China have quietly started negotiations to improve US access to Chinese markets, which eased fears of a trade war between the two economic giants.
“Renewed momentum was witnessed in European and Asia stocks on hopes that talks between the US and China could prevent an escalation of the trade dispute between the two countries,” said Karthikraj Lakshmanan, Senior Fund Manager-Equities, BNP Paribas Mutual Fund.
Benchmark equity indices also got boost after the Finance Ministry said that India is on track to doubling the size of its economy to $5 trillion by 2025.
India is well poised to click a growth rate of 7-8 per cent and with focus on startups, MSMEs and infrastructure investment it can step on to higher growth pedestal, Economic Affairs Secretary Subhash Chandra Garg said.
“I think it is very reasonable to expect, if the economy remains focused on producing goods and services and generate demands for next 7-8 years… we can achieve the level of $5 trillion of economy by 2025.
That’s the reasonably set goal,” Garg said at the CII Global Industry Associations Summit.
Positive global cues further improved market sentiment back home with European markets making a firm start as trade-related tensions seemed to be easing. Other Asian peers were traded in the green. Reversing early gains, Hang Seng and Nikkei jumped up to 0.80 per cent on Monday.
Low-level buying also helped Nifty and Sensex reclaim the psychological levels of 10,000 and 33,000, respectively. Last week, the indices had slipped over 10 per cent from their all-time highs scaled on January 29, 2018.
“The correction of over 10 per cent from the recent peak was largely in line with the major corrections seen in last few years, which includes one seen in December 2015 (triggered by interest rate hikes in US – first time since 2006) followed by another correction in November 2016 by Demonetisation – a bold reform with unknown ramification). In both the cases, the correction was largely in range of 10-12 per cent from the previous peak. Hence, we believe that bulk of the price damage is perhaps behind us though it is not easy to call a bottom and perfectly time the market,” said Gaurav Dua, Head of Research, Sharekhan.
Buying momentum along with short covering around 9,950 levels pulled index higher to close on a strong note. The daily price movement formed sizable bullish candle and covered almost past two sessions losses, according to Rajesh Palviya, Head – Technical & Derivatives Analyst, Axis Securities.
Shares of Yes Bank (up 5.67%), State Bank of India (up 5.01%), HDFC Bank (up 2.91%), Tata Steel (up 2.8%), HDFC (up 2.66%), Bharti Airtel (up 2.55%), L&T (up 2.16%), ICICI Bank (up 2.05%), M&M (up 1.98%), Hero MotoCorp (up 1.94%), Maruti Suzuki (up 1.87%), Bajaj Auto (up 1.68%), HUL (up 1.6%), Coal India (up 1.36%), Axis Bank (up 1.3%), Asian Paints (up 1.01%), Reliance Industries (up 0.92%) and Adani Ports (up 0.88%) emerged as the lead gainers among the BSE Sensex components rising up to 6%. Shares of big-three IT companies Infosys, Wipro, TCS were the only decliners. The stock of Wipro dropped 3.96% to end at Rs 273.9 on BSE.
Shares of heavyweight companies such as HDFC Bank, HDFC, State Bank of India, ICICI Bank, L&T, Yes Bank, Reliance Industries and Maruti Suzuki contributed the most in the Sensex rally. Collectively these eight stocks alone added about 374 points out of the 470-point upsurge in the index.
A market-wide buying was observed in all of the sectors barring the Nifty IT index. All the components of Nifty PSU Bank index surfaced as rock stars on Monday with shares of Canara Bank, Bank of Baroda, State Bank of India, Union Bank of India, Bank of India and Indian Bank rising 4 to 11%. Apart from Nifty PSU Bank index, sectoral indices of Nifty Bank, Nifty Financial Services, Nifty Media, Nifty Metal, Nifty Private Bank, Nifty Realty, Nifty Auto, Nifty FMCG surged 1 to 4% while Nifty IT index dropped 0.63% as blue-chip shares of TCS, Infosys and Wipro lost up to 3.5% with stock of India’s third-largest IT company Wipro dragging heavily.
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