Market participants were also buying stocks in droves on expectations that the Centre is working on a booster package for capital markets
After witnessing a mixed trend in the current month so far, domestic equity markets were back in action on Thursday, as investors lapped up the beaten-down stocks amid reports the government may relook at the long-term capital gains (LTCG) tax. Market participants were also buying stocks in droves on expectations that the Centre is working on a booster package for capital markets.
Bouncing back sharply on Thursday after the recent weakness, the S&P BSE Sensex jumped 636.86 points, or 1.74%, to settle at 37327.36, whereas the broader NSE Nifty 50 gained 176.95 points, or 1.63%, to end at 11032.45. Intraday, Sensex touched a high of 37,405.48 and a low of 36,655.41, while the Nifty touched an intraday high and low of 11,058.05 and 10,842.95, respectively.
After news report said the government might withdraw the FPI surcharge through a notification or ordinance, the markets witnessed wide-spread buying support, helping the Sensex post its biggest single-day gain since May 24 when the index had risen 623 points.
RAISING HOPES
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- News reports said the government might withdraw the FPI surcharge through a notification or ordinance
- The government may relook at the LTCGand is working on a booster package for capital markets
- Auto index jumped 3%, realty rose 1.86%, IT gained 1.83%, PSU Bank was up 1.73%
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Ajay Bodke, CEO- PMS Prabhudas Lilladher, said "Such a move will be strongly welcomed by the markets reeling under unprecedented selling from the FPIs after the Union Budget due to a host of domestic & international headwinds. Refusal to roll back the surcharge on FPIs and the absence of a fiscal stimulus to beleaguered sectors like automobile & NBFCs are the principal reasons for the recent plunge in Indian equities. Any move to offer a generous relief on both these counts can lead to a massive short-covering by speculators and a strong rally due to buying from FPIs and domestic Institutional investors."
Despite the strong upsurge, the Sensex is still down 154 points in the current month so far after plunging nearly 2,000 points in the previous month.
According to Reuters, which quoted a government official, the Centre is likely to exempt foreign portfolio investors from an increase in taxes that was part of the Union Budget being approved by the Parliament but faced a lot of criticism from the investor fraternity.
Sectorally, all indices on NSE settled in the positive territory. Auto index (3.03%) rallied the most, followed by realty (1.86%) , IT (1.83%) and PSU bank (1.73%).
Of the 30-stock Sensex, 27 ended in the green and three in the red. Top gainers of the day were HCL Technologies, Tata Motors, Mahindra & Mahindra, Bajaj Auto, Reliance Industries and Hero Moto Corp, gaining up to 6.43%. Tata Steel, IndusInd Bank and Axis Bank, however, lost up to 3.77%.
In the broader market, midcap and smallcap indices gained less, thus underperforming the benchmark indices.
Shrikant Chouhan, head technical research, Kotak Securities, said "Nifty gained almost 176 points today, recovering over 200 points from the day's lowest level. Sensex closed at 37327 gaining 637 points, which is its highest in the last 34 days. This was mainly due to exceptional strength in Reliance Industries and HDFC Bank. Dollar, rupee, and gold faded their shine due to a strong recovery in domestic and global markets and were trading at 70.66 and 37775 respectively. The advance-decline ratio was at 1.5 to 1 and volumes were above average. Recovery looks sustainable for the next few days."
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Ajay Bodke, CEO- PMS Prabhudas Lilladher, said "Such a move will be strongly welcomed by the markets reeling under unprecedented selling from the FPIs after the Union Budget due to a host of domestic & international headwinds. Refusal to roll back the surcharge on FPIs and the absence of a fiscal stimulus to beleaguered sectors like automobile & NBFCs are the principal reasons for the recent plunge in Indian equities. Any move to offer a generous relief on both these counts can lead to a massive short-covering by speculators and a strong rally due to buying from FPIs and domestic Institutional investors."
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