Markets snap losing streak, but risks remain

MUMBAI: Indian equities snapped a seven-session losing streak to close nearly 1% higher on Thursday as investors returned to accumulate stocks at lower price levels. Although analysts say that the correction might not be complete, the Reserve Bank’s monetary policy statement which favoured economic growth and prospects of an earnings revival encouraged investors.

BSE’s 30-share Sensex closed 0.97%, or 330.45 points, higher at 34,413.16 points, while National Stock Exchange’s 50-share Nifty rose 0.96%, or 100.15 points, to close at 10,576.85 points. They are still down 4.31% and 4.09% respectively so far in February.

“It is just a bounceback after the recent steep decline. Certain quarterly numbers (company earnings) were also positive which helped,” said Ajay Bodke, chief executive officer and chief portfolio manager at brokerage firm Prabhudas Lilladher Pvt. Ltd.

Power plant equipment maker Bharat Heavy Electricals Ltd. posted around 64% rise in December quarter net profit while cement maker ACC Ltd reported a doubling of net income.

“It is not clear if the market direction (of Indian stock market) is back to being positive for the near term,” said Hemang Jani, senior vice-president and head of advisory desk at Sharekhan by BNP Paribas.

World markets traded mixed on Thursday. Japan’s Nikkei and Hong Kong’s Hang Seng index climbed 1.13% and 0.42%

respectively while European markets traded lower.

“There could be more pain in the global markets as people who were shorting volatility with leveraged positions in the US may still have to unwind,” warned Jani. Foreign institutional investors’ (FIIs) net inflows in Indian shares so far this year dropped below $2 billion as they sold in the last few sessions.

On the other hand, domestic institutional investors (DIIs) who went slow with their equity investments in January, accelerated inflows into Indian shares in February, taking net inflows in the asset class so far in 2018 to ₹2,856 crore.