Sensex rebounds 600 points on bottom fishing; buy bank, IT stocks, say analysts

NEW DELHI: Indian bluechip indices were trading with gains on Tuesday as traders came back to buy stocks at a lower level after two days of sharp fall. Bank and metals stocks bounced the most while pharma continued to be subdued.

The main trigger for the market fall in the recent couple of months has been the relentless selling by FIIs, analysts said. But they added it is a good time to buy quality stocks for the medium to long term.

“The underperformance of banking is bound to change since asset quality concerns have receded and credit growth is picking up. So, investors can utilise this correction to buy high-quality banking stocks. IT, which is in a multi-year upcycle, presents another good buying opportunity during this correction,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

How are bluechips doing

After opening in the green, benchmark indices extended gains. At 10.06 am, BSE flagship Sensex was up 624 points or 1.10 per cent at 57,372. NSE benchmark Nifty gained 172 points or 1,02 per cent to 17,084.

In the 50-share pack Nifty, Hindalco Industries was the biggest gainer, up 2.61 per cent. Tata Steel, JSW Steel, Kotak Mahindra Bank, Axis Bank, Adani Ports and Tata Motors were among other gainers.

Dr Redddy’s Labs was the top loser in the pack, down 0.73 per cent. Cipla, Divi’s Labs, Sun Pharma and SBI Life Insurance were among other stocks that traded in the red.

FACTORS DRIVING MARKETS

China fires growth engine: The People’s Bank of China said on Monday it would cut the amount of cash that banks must hold in reserve, its second such move this year, releasing the funds in long-term liquidity to bolster slowing economic growth.

Dollar, yields steady: The dollar index steadied, hanging on to an overnight jump made with US yields as investors hoped early signs the Omicron variant may be mild will be proved correct.

Inflation warning: Bank of England Deputy Governor Ben Broadbent said on Monday that inflation in Britain might “comfortably exceed” 5 per cent in April and that the country’s tight labour market risked becoming a more persistent source of inflation.

Fauci’s soothing comment: Omicron has spread to about a third of U.S. states, but the Delta version accounts for the majority of COVID-19 infections in the United States, health officials said on Sunday. Dr Anthony Fauci, the top US infectious disease official, told CNN it does not look like Omicron has a “great degree of severity.”

Broader markets
Broader market indices were trading higher, underperforming their headline peers in morning trade. Nifty Smallcap was up 1.16 per cent while Nifty Midcap rose 0.58 per cent. Broadest index on NSE, Nifty 500 was up 0.70 per cent.

Indian Hotel, National Aluminium, Hindustan Copper, MMTC, HFCL and Indiabulls Housing Finance were gainers from the space while KEI Industries, VIP Industries, Happiest Minds, L&T Tech Services, Vodafone Idea and Endurance Tech were under selling pressure.

Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.6 per cent after declining on Monday to the lowest level in one year. The benchmark has lost 6 per cent so far this year, with Hong Kong markets figuring among the big losers, while Indian and Taiwanese stocks outperformed.

On Tuesday, Australia’s S&P/ASX200 rose 0.5 per cent, while Japan’s Nikkei advanced 1.1 per cent as risk-on sentiment pushed U.S. stocks higher. China’s CSI300 index gained 0.7 per cent and Hong Kong’s Hang Seng Index advanced 1.3 per cent as the central bank freed up $188 billion in liquidity through policy easing.



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