Banks, fin stocks lift sensex by 646 pts
Mumbai: After sliding for six sessions, the sensex reversed the trend as strong buying emerged in banking and financial services stocks due to falling gilt yields, which could lead to higher profits for lenders. The sensex opened flat but gained through the session to close at 38,178 — up 646 points or 1.7% on the day.
In the process, global factors like uncertainty about a trade deal between the US and China, and signs of a slowing global growth rate were pushed onto the back burner, brokers said.
The decision by the government to hike dearness allowance (DA) for its employees from 12% to 17% also helped the rally as this step could help consumer goods companies. According to HDFC Securities head (retail research) Deepak Jasani, the gains came on the back of bargain hunting. “Sentiments also turned positive after the government on Wednesday hiked DA by 5 percentage points, entailing an outgo of Rs 16,000 crore. This move will benefit at least 50 lakh government employees and 65 lakh pensioners,” Jasani said.
The day’s trade added about Rs 1.8 lakh crore to investors’ wealth with the BSE’s market cap now at Rs 143.5 lakh crore. Among the sensex stocks, HDFC Bank, ICICI Bank, Kotak Bank and HDFC together contributed about 60% of the gains, while lower closings for ITC, TCS and Infosys limited the index’s gains partially, BSE data showed.
Interestingly, the strong gains came despite foreign investors continuing to be sellers in the market with a net outflow figure of Rs 485 crore, according to BSE numbers. Domestic funds on the other hand were net buyers at Rs 956 crore.
Meanwhile, in the forex market, the Indian currency recouped most of its losses during the day to settle marginally in the red. At the interbank foreign exchange market, the rupee opened strong at 71.20 against the US dollar. During the day, the domestic unit fluctuated between a high of 70.94 and a low of 71.22. The local unit finally settled at 71.07, down 4 paise over its Monday close of 71.03.