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Sensex rebounds 718 points on RBI plan, short-covering

Experts see rally fizzling out and Nifty hitting 9500 level

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The stock markets started the week on a buoyant note with both Sensex and Nifty gained over 2% after two days of losing streak.

Sensex reclaimed the 34000-mark and Nifty ended above 10250 level as RBI plan to infuse Rs 40,000 crore into the banking system in November for better liquidity fuelled banking stocks.

The benchmark 10-year G-Sec yield fell, helping the PSU Bank index to almost 8% on Monday.

The 30-share Sensex opened the session higher at 33549.88 and went as high as 34154.02 before closing at 34067.40, soaring 718.09 points, or 2.15%. During the last two sessions, the index had lost 684.54 points.

The broader Nifty, on the other hand, surged 220.85 points, or 2.20%, to close at 10250.85. The 50-share index had opened 44.25 points, or 0.44%, higher at 10074.25. During the intra-day trade, the index touched a high of 10274.15.

"Markets started the week on a robust note and posted decent gains in the end. Among the benchmark indices, Nifty opened with an uptick and gradually inched higher, tracking encouraging earnings announcements. Banking and pharma led the rebound and others also joined in as the session progressed. Besides, recovery in broader market indices boosted the sentiment," said Jayant Manglik, president at Religare Broking.

Impressive quarterly results by the corporates also lifted the sentiment other than recovery in the global markets and 10-year bonds falling to two-month low.

ICICI Bank, State Bank of India, Adani Ports, Axis Bank and Larsen & Toubro contributed most to the Sensex rally, rising as much as 10.82%.

The investor wealth soared over Rs 3 lakh crore on Monday is driven by a rally in the broader market. The sharp gain in stocks, send the market capitalisation of the BSE-listed companies higher by Rs 3,11,665.6 crore to Rs 1,36,43,642.98 crore.

"This rally is short-covering. It will continue for two-three days and then the market will again fizzle. It might touch 10500-10600 level but will not be able to sustain," said A K Prabhakar, head of research at IDBI Capital. "I am very negative on the markets right now. Nifty will soon touch the 9500-level. Next time a rout happens, the index will give up 10000-mark and might range 9500-9950," he said.

However, Manglik said, "We may see further rebound ahead, but the upside seems to be capped. Earnings and the global cues would largely dictate the market trend in the near future."

All the 19-sub-sectoral BSE indices ended the day in green with BSE Healthcare rising 4.21%. Other top gaining sectors were Realty (3.77%), Capital Goods (3.66%), Energy (3.33%) and Industrials (3.23%).

The BSE Midcap and Smallcap indices also had a positive day, as both advanced 2.80% and 2.06% respectively.

"Nifty index opened positive and witnessed sustain buying interest till the end of session towards 10275 zones. It formed a bullish candle at its crucial support of psychological 10000 zones and managed to recover the losses made in the last three sessions. It has seen a positive divergence with mechanical indicators and turning from its deep oversold territory. Now it has to continue to hold above 10180-10200 zones to extend its bounce towards 10333, then 10450 levels, while on the downside, support exists at 10180, then 10138 levels," Motilal Oswal Financial Services stated in a report.

Meanwhile, oil prices fell on Monday. Brent crude oil futures were down 31 cents at $77.31 a barrel. The rupee ended the day almost closing at 73.45 against the US dollar as against the previous close of 73.46.

As per the provisional data, the foreign institutional investors sold shares worth Rs 2,230.79 crore on Monday while the domestic institutional investors bought shares of Rs 2,526.9 crore on a net basis.

SOARING HIGH

  • Impressive quarterly results by the corporates also lifted the sentiment other than recovery in the global markets 
     
  • The investor wealth soared over Rs 3 lakh crore on Monday is driven by a rally in the broader market
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