Mumbai, Indian equities got a lift on Monday amid expectations the central bank will take measures to ease liquidity crunch and relax lending norms for state-run banks.
“The market gained despite a drop in optimism about potential US-China trade deals. Investors looked to the RBI’s board meeting to get cues on liquidity crunch at non-banking financial companies and lending norms for PSU banks,” said Geojit Financial Services’ Head of Research Vinod Nair.
A stronger rupee and a fall in global crude oil prices also cheered market participants, he said.
Healthy foreign fund inflows on the back of improved macro-economic fundamentals also burnished the appeal of stocks.
However, the gains in the benchmark indices were not without hiccups. Volatility marked trading on Monday, ahead of the second and final phase of voting for the assembly election in Chhattisgarh on Tuesday.
Notwithstanding the initial fluctuations, the S&P BSE Sensex and NSE Nifty50 rose amid bets the recent frosty relations between the government and the Reserve Bank of India would thaw.
Recently, the government has been demanding that the RBI make liquidity available, especially to the shadow banks after a series of defaults by the Infrastructure Leasing & Financial Services (IL&FS) triggered a contagion scare and precipitated a credit crunch.
The Centre has also reportedly demanded that the RBI hand over a significant chunk of its reserves, which was subsequently denied by the Union Finance Ministry as “misinformed speculation”.
Last month, RBI Deputy Governor Viral Acharya had warned of economic consequences if the central bank’s autonomy was encroached upon.
Interest-rate sensitive stocks like banking, automobile and capital goods rose, while the oil and gas sector came under pressure.
The S&P BSE Sensex settled up 317.72 points or 0.90 per cent at 35,774.88 points, from its previous close of 35,457.16 points.
The NSE’s Nifty50 also clocked healthy gains. It rose 81.20 points or 0.76 per cent to finish at 10,763.40.
The overall market breadth was positive and the broad-market indices like the NSE Mid-cap and NSE Small-cap indices closed 0.48 per cent and 0.53 per cent higher, respectively, analysts said.
HDFC Securities’ Retail Research Head, Deepak Jasani, said: “Technically, the underlying trend for the Nifty continues to be positive. The next upside to be watched for is 10,844. The immediate support is seen at 10,691.”
The Indian rupee appreciated 28 paise to closed at Rs 71.64 per US dollar from its previous settle of 71.92.
“This (rupee appreciation) is in line with the gains across the emerging market currencies, which made a bottom on November 13 and started to correct upwards versus the US dollar,” Jasani said.
Provisional data with the exchanges showed that foreign institutional investors bought stocks worth Rs 1,103.36 crore on Monday while the domestic institutional investors sold scrips worth Rs 310.26 crore.
The top gainers on the Sensex were Yes Bank, up 7.19 per cent at Rs 205.05; ITC, up 2.77 per cent at Rs 283.90; Tata Motors, up 2.73 per cent at Rs 184.30; Tata Motors (DVR), up 2.63 per cent at Rs 101.40; and IndusInd Bank, up 2.60 per cent at Rs 1,537.75 a share.
The laggards were ONGC, down 1.37 per cent at Rs 154.40; ICICI Bank, down 1.33 per cent at Rs 362.50; State Bank of India, down 0.72 per cent at Rs 288.20; Asian Paints, down 0.65 per cent at Rs 1,311.90, and NTPC, down 0.65 per cent at Rs 153.05 per share.
