Benchmark indices rebounded sharply with the Sensex rising 407 points intraday Monday, driven by short covering ahead of RBI monetary policy and positive global cues. Strong auto sales data and easing geopolitical tensions after Pakistan PM Advisor comments also lifted the market sentiment. However, the index had fallen 802 points last week on profit booking.
The 30-share BSE Sensex was up 377.33 points or 1.35 percent at 28243.29 and the 50-share NSE Nifty gained 126.95 points or 1.47 percent at 8738.10.
The broader markets outperformed benchmarks for the second consecutive day with the Nifty Midcap rising nearly 3 percent to end at record closing high. More than three shares advanced for every share falling on the Bombay Stock Exchange.
Urjit Patel as Reserve Bank of India governor will announce its first monetary policy on Tuesday. New monetary policy committee is likely to keep rates unchanged but commentary will be closely watched, especially after retail inflation fell to 5.05 percent in August from 6.07 percent in preceding month, experts say.
They feel the gush of liquidity will continue to support the market despite intermittent profit booking and volatility. FIIs bought Rs 8,500 crore worth of shares last month, in addition to 56,000 crore worth of shares in previous six months.
India is likely to see double-digit earnings growth in FY17 and FY18, feels Mahesh Nandurkar of CLSA. Tailwinds in the next couple of quarters from reasonably good monsoons and low base effect in the banking space should help in 12-14 percent earnings growth in FY17, he says.
Meanwhile, Sartaj Aziz, advisor to Pakistan Prime Minister Nawaz Sharif on Foreign Affairs, confirmed today that both India & Pakistan have decided to reduce tensions.
All sectoral indices closed in the green while Volatility Index slipped 10 percent to close below 200-daily moving average.
September sales data lifted Nifty Auto index 2.5 percent. Maruti Suzuki ended at record closing high of Rs 5,677.05, up 3.7 percent after highest ever monthly sales of 1.49 lakh units in September, up 31.1 percent over a year-ago period.
More to come….