US Fed's Decision to Maintain Rates Buoys Indian Markets

The government\'s push for reforms, coupled with the US Fed\'s decision to keep interest rates intact, buoyed investor sentiments.

Published: 30th July 2015 05:41 PM  |   Last Updated: 30th July 2015 05:41 PM   |  A+A-


MUMBAI:  Clarity regarding P-Notes, the government's push for reforms and the expiry of July derivative contracts, coupled with the US Fed's decision to keep interest rates intact, buoyed investor sentiments on Thursday.

The global and domestic developments helped the barometer 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) to close the day's trade up 142 points or 0.51 percent.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) also made gains during the day's trade. It closed higher by 46.75 points or 0.56 percent at 8,421.80 points.

The S&P BSE Sensex which opened at 27,685.82 points, closed at 27,705.35 points -- up 141.92 points or 0.51 percent from the previous day's close at 27,563.43 points.

The Sensex touched a high of 27,854.46 points and a low of 27,649.97 points in the intra-day trade.

According to market analysts, the US Federal Reserve's statement that cited improvements in the US labour and housing markets reduced the chances of an interest rate hike for the year.

If interest rates in the US are hiked, the FPIs (Foreign Portfolio Investors) are expected to be led away from emerging markets such as India.

Analysts pointed out that the news of the cabinet approving the GST (goods and services) bill that incorporates recommendations from a parliamentary panel also acted as a strong positive trigger.

"Though FOMC (Federal Open Market Committee) held rates as expected, improved chances of a September rate hike did bring in some nervousness in the early trades," said Anand James, co-head, technical research desk, Geojit BNP Paribas.

"However, SEBI (Securities and Exchange Board of India) chairman’s clarification that SIT (special investigative team) does not recommend a ban on P-Notes, added momentum to the upward movement."

The SIT appointed by the Supreme Court on black money had recommended that the participatory note, or P-Note, route of overseas funds investing in Indian stocks be stringently regulated.

James added that a mild uptick in roll-over of futures and options (F&O) positions, when compared to last month’s expiry shows a cautious approach taken by the investors.

The roll-over figure at the end of July's derivatives expiry stood at a modest 61.7 percent.

Gaurav Jain, director of Hem Securities said the indices shut the derivative expiry day on a firm note.

"There were renewed hopes that GST bill can pass in this monsoon session of parliament," Jain added.

Sector-wise, healthy buying was observed in fast moving consumer goods (FMCG), healthcare, banks, automobile, and realty stocks.

However, information technology (IT), capital goods and technology, entertainment and media (TECK) sectors came under intense selling pressure.

The S&P BSE FMCG index zoomed by 212.76 points, the healthcare index rocketed by 127.22 points, banks index augmented by 122.22 points, automobile index was higher by 50.41 points and the realty index was up by 45.34 points.

However, IT index receded by 84.57 points, capital goods index declined by 43.46 points and TECK index decreased by 33.57 points.

Major Sensex gainers during Thursday's trade were: Dr.Reddy's Lab, up 5.23 percent at Rs.3,907.55; Cipla, up 4.79 percent at Rs.710.10; ITC, up 3.90 percent at Rs.315.80; Hindustan Unilever, up 2.32 percent at Rs.920.45; and HDFC, up 1.96 percent at Rs.1,337.40.

The major Sensex losers were: Sun Pharma, down 1.89 percent at Rs.814.30; Hindalco Inds, down 1.60 percent at Rs.104.70, Infosys, down 1.48 percent at Rs.1,069.10; Tata Consultancy Services (TCS), down 1.08 percent at Rs.2,480.95; and Tata Steel, down 0.92 percent at Rs.248.35.

Among the Asian markets, Japan's Nikkei was up 1.08 percent. However, China's Shanghai Composite Index lost 2.20 percent and Hong Kong's Hang Seng fell by 0.49 percent.

In Europe, the London FTSE 100 index was higher by 0.67 percent, the French CAC 40 was up by 0.74 percent and Germany's DAX Index gained by 0.63 percent at the closing bell here.

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