Stocks rally for third day on robust global cues
NEW DELHI: Positive cues from the global as well as the domestic arena led to gains in the market for the third day in a row. In the global markets, risk sentiments have improved with encouragement from strong earnings performance by institutions such as the Bank of America.
The reversal in UK tax cut proposals also provided a boost to global market sentiments. In the domestic arena, investor confidence was boosted by a declining dollar index, stable crude oil prices, declining foreign fund outflows, festive season demand growth, and decent corporate performance.
The Nifty gained 1.01% while the Sensex closed with gains of 0.94%, just shy of the 59,000 mark.
“The market is sustaining its gains because of favourable global and domestic cues. Homegrown positivity is because of the downward trend of crude prices and upside prospects to Q2 corporate earnings” said Vinod Nair, head of research at Geojit Financial Services.
The Reserve Bank of India’s (RBI’S) confidence that headline inflation has peaked in September and will decline has been taken cheerfully by the financial market, providing upside to banks, Nair said.
The RBI in its latest bulletin has said that the country’s retail inflation was set to ease from the five-month high of 7.4%, while economic activity is poised to expand.
The Nifty PSU Banks Index was the largest gainer, up 3.97%. Among others, realty, media, capital goods, auto, and telecom indices also lent support with smart gains, though all the sectors ended in the green.
Volumes on NSE were back in line with recent averages that is also a positive, said analysts.
S Ranganathan, head of research at LKP Securities said that “Benchmark indices gained a percentage today primarily led by the PSU banks as the pickup in the corporate loan cycle and retail loans during the festive season provided the muchneeded tailwinds”, Ranganathan said.
The trickle down effect to the non-banking PSU stocks was a key highlight of trade as several PSU stocks across sectors were heavily sought after on the back of rising volumes, Ranganathan said.
Defence stocks gained limelight after Prime Minister Narendra Modi gave the target of achieving $ 5billion in defence exports by 2025.
The majority of IT companies declared healthy numbers, leading to a positive outlook in the corporate earnings season, said analysts. The second quarter is likely to see margins bottomed out.