After a major fall in the equity markets on Monday, investor sentiment recovered with indices ending in the green on Tuesday.
Anxious over the resignation of Reserve Bank of India (RBI) governor Urjit Patel, that came after the market hours on Monday, the Sensex opened 517.97 points, or 1.48%, down on Tuesday, but soon reversed trend, despite assembly polls results showing that BJP was losing in three major states.
Nifty, too, opened 144.05 points, or 1.37%, down. The 30-share Sensex rose 190.29 points, or 0.54%, to close at 35150. The broader Nifty settled at 10549.15, rising 60.70 points, or 0.58%. Sensex had lost almost 714 points on Monday amid state poll results uncertainty.
Market experts said the indices gained as the Street interpreted the assembly polls' outcome as not much negative for the ruling alliance. Positive global cues, with European and some Asian market gaining, also aided the rally.
"Short-covering along with the absence of large selling led to a recovery in the markets. Highest advance, decline ratio in almost a month also improved sentiments. Typically, when two or three negative events happen or are expected to happen at the same time, market participants sell in anticipation and buy on the news/event happening. After the kind of sharp cuts we saw Monday and Tuesday, we may have reached a near-term bottom, though our markets may not be totally out of the woods," Deepak Jasani, head of retail research at HDFC Securities, said.
As per the provisional data, foreign institutional investors sold shares worth Rs 2,421.06 crore on Tuesday while the domestic investors bought shares worth Rs 2,255.68 crore.
"Support based buying interest and recovery in rupee helped the indices. Also, cash based buying by DIIs also supported the market after its opening dips," Chandan Taparia, derivatives and technical analyst at Motilal Oswal Financial Services said. The broader market too rebounded on Tuesday as both the BSE Midcap and Smallcap indices advanced by 1.54% each. YES Bank, Sun Pharma, Asian Paints, State Bank of India and Axis Bank added most to Sensex pack rising as much as 7.29%.
"In the last seven-eight days, we have seen a correction of almost 600 points. The financial sector gained and all the stocks ended in green. We have seen too much of negativity in the market, so the investor gained confidence and started buying on Tuesday. RBI governor resignation is a concern for the investors, but it will be solved soon. Tuesday's rally entirely technical one, we can see more correction due to general elections in the coming days and year," A K Prabhakar, head of research at IDBI Capital, said.
All the sectors on Nifty ended in the green. On Sensex however, except BSE Oil & Gas (-0.21%), all the 18 sub-sectoral indices ended positively. BSE Consumer Durables topped the chart, rising as much as 2.60%, while on NSE, Nifty PSU Bank took the pole position rising 2.65%. Other sectoral gainers on Sensex were BSE Healthcare (1.93%), Consumer Discretionary (1.70%), FMCG (1.41%) and Basic Materials (1.23%).
A sudden rise in Bank Nifty was noticed as it formed a Bullish Belt Hold candle on the daily scale and recovered from its intra-day low of 25600 to 26200 zones. It managed to reclaim its 50 DEMA and requires a decisive hold above 26000 zones to extend its bounce.
Rupee at the end of the day showed a late recovery and ended 53 paise lower at 71.85 against the US dollar following the election results and Urjit Patel exit.
"The rupee recovered lost ground during the day to trade sub-72 at 71.80 levels in spite of the ruling party not being able to post strong results. This trend is reflective of the markets factoring in benefits of lower inflation due to weak oil prices on account of an oversupply of oil on the back of sluggish world economic growth. This, coupled with the rupee paying arrangement with Iran for oil augurs well for us. We expect the rupee to range between 71.20 and 71.80," said Salil Datar, executive director and CEO, Essel Forex.
CHANGING FORTUNES
- 60.70 points — Nifty gained on Tuesday
- 714 points — Sensex had lost on Monday
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Market experts said the indices gained as the Street interpreted the assembly polls' outcome as not much negative for the ruling alliance. Positive global cues, with European and some Asian market gaining, also aided the rally.
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