Indian equity markets registered their highest single-day percentage gains since early October on across-the-board buying tracking a rally in global stocks after the minutes of the US Federal Reserve released on Wednesday indicated that the US central bank would hike interest rate but the pace of increase going forward would be gradual.
Overnight, the Wall Street jumped euphorically post the released of US Federal Reserve’s meeting minutes that hinted at raising the interest rates in December as it feels confident about the health of the world’s largest economy.
But the Fed also indicated that it would proceed with caution on further tightening of the monetary policy, which aided the enthusiasm across the financial world.
The S&P BSE Sensex ended at 25,841, up by 359 points while the Nifty50 settled at 7,842, up by 110 points. Both the benchmark indices ended 1.4% up- highest single day percentage gain since October 5.
According to Ranak Merchant, Technical Analyst - Strategies of Sushil Financial Services “The week was of a tumultuous nature as markets saw alternate bouts of positive and negative close amidst global market cues and developments. The lows appear to be arrested near 7700 levels while 7850 on the upside offers a stern resistance. With the next week being a truncated one yet again and with F&O expiry, volatility would be in the higher end.”
She has laid out the levels to watch out for. “Watch for a close above 7850 for a rally towards 8050-8100 while support continues to be in the 7691-7723 zone.
With short term oscillators in the oversold zone, any dips towards the said supports could be used to generate fresh longs with a stop loss of 7650.”
Globally, all the Asian equities ended in green territory. Japan’s central bank has maintained its monetary position, citing confidence in the economy despite challenging conditions. Nikkei is up by 1%. Other Asian markets- Straits Times, Hang Seng, Shanghai Composite have all surged between 1.3-1.5% each.
The European equities also opened positively, shrugging off security concerns in France, as FTSE 100, CAC 40, DAX, have all climbed up by 1%
In a firm market, Dr Reddy’s Lab stood out as sore loser. The drug manufacturer that plunged in the opening trades recovered a bit but only to end at 2.2% down.
The scrip of the pharma company has been in a soup since the US FDA questioned the quality at three of its manufacturing firms in India.
Sarabjit Kour Nangra (VP Research - Pharma, Angel Broking says, “Lundin Law PC announced it is investigating claims against Dr. Reddy’s Laboratories Ltd concerning possible violations of federal securities laws. However, currently we don’t think there are any major immediate financial implications of the same and hence, we maintain our numbers and BUY rating with a price target of INR 3933.”
Another stock that hogged limelight today was Hero motocorp in the early trades.
The two- wheeler announced that it clocked over one million units in retail sales over the festive season. The lowering of interest rates and drop in crude oil prices also seem to have helped the company. Other auto stocks that jumped today were Bajaj Auto and Maruti Suzuki that ended up between 2-3% each.
From the IT space, Infosys has rebounded after suffering losses in past four trading sessions. The stock finished over 2.5%.
This rebound has helped its peers such as TCS, Wipro to register 0.4-0.5% gains as well.
Out of the 3 stocks on the Sensex that were trading lower in an upward market is Coal India. The stock dropped 0.4%.
The government has approved a 10% divestment in the state run company yesterday.
The stock had seen a broad based buying interest for the past few sessions, despite a weakness in the market.
The Union Cabinet on Wednesday approved a marketing margin of Rs 150-200 a standard cubic meter (scm) to be charged by natural gas retailers such as Reliance Industries and GAIL from urea and for liquefied petroleum gas (LPG) plants. Reliance Inds soared 2.4% while GAIL finished up by 2.4%