A thaw in Indo-China matrix after the Doklam dispute plus improving services data yesterday brought cheer to markets as key stock indices pushed higher at the close defying intermittent spells of turbulence. Investors went looking for bargain in banking, oil and gas and auto stocks.
India and China yesterday agreed to move forward in their ties, with Chinese President Xi Jinping telling Prime Minister Narendra Modi that he wants to put the relationship on the “right track”. Meanwhile, August services sector activity contracted for the second consecutive month, but at a slower pace, a monthly survey has found. The Nikkei India services purchasing managers’ index (PMI) improved slightly to 47.5 in August, from 45.9 in July.
The Sensex jumped at the open and hit the day’s high of 31,863.47. But due to weak Asian markets, the barometer ended at 31,809.55, still up 107.30 points, or 0.34%, from its previous close. The Sensex had lost 190 points in the previous session, in line with a general weakness across the globe set off by North Korea’s nuclear test on Sunday. NSE Nifty also moved up by 39.35 points, or 0.40%, to end at 9,952.20, after moving between 9,963.10 and 9,901.05.
“Market started with a subdued bias, but later recovered with a sign of improving bilateral relationship between India and China. Additionally, improving manufacturing and service data (August) and tax collection will address concerns on valuation,” said Vinod Nair, head of research, Geojit Financial Services.
Days after the prolonged stand-off in the Doklam area of the Sikkim sector was defused, the two leaders held an hour- long meeting which Modi described as “fruitful”.
Buying activity picked up momentum in the later part of the session, in tandem with strong opening of European shares. The overall recovery received some support from consumer durables, up 2.32%, along with realty, oil and gas, metal and banking stocks which recouped their losses to an extent. Coal India remained in the lead, with a gain of 2.96%, with Adani Ports adding 1.60%, Bajaj Auto 1.58% and Reliance Industries 1.34%. Bharti Airtel trailed with most losses, down 2.25%. Broader markets such as small- and mid-cap indices surged up to 1.03%.
Foreign funds net offloaded shares worth Rs873.91 crore yesterday, showed provisional data. For a change, even domestic institutional investors (DIIs) dumped shares worth Rs49.10 crore.
Meanwhile the rupee yesterday weakened for the third session to close at over two week low against the US dollar. The rupee closed at 64.13 a dollar—a level last seen on August 21, down 0.13% from its Monday’s close of 64.05. The rupee opened at 64.12 a dollar and touched a high and a low of 64.09 and 64.16, respectively.
The 10-year bond yield ended at 6.5%, compared to its previous close of 6.496%. Bond yields and prices move in opposite directions.
So far this year, the rupee has gained 5.9%, while foreign institutional investors (FIIs) bought $7.05bn and $19.90bn in equity and debt markets, respectively.
Asian currencies were trading mixed. Japanese yen was up 0.19%, South Korean won 0.16%, Malaysian ringgit 0.15%, Singapore dollar 0.11% and Philippines peso 0.1%.
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