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Sensex rally 600 points; these factors helped market avoid a major selloff

NEW DELHI: An up to 3 per cent rout in global stocks could not deter domestic stocks rallying over 1 per cent in Monday’s trade, thanks to FM Nirmala Sitharaman’s ‘mini-Budget’ that offered sops to the ailing banking, auto and NBFCs sectors and eased FPI concerns by rolling back tax surcharge announced in the Budget.

A drop in crude oil prices added to the sentiment. A fall in rupee, and a global selloff, though put a cap on gains.

At opening bell, the BSE Sensex climbed 662.79 points to hit a hit of 37,363.95. The 30-pack index though cut losses and was trading 300 points, or 0.82 per cent, higher at 37,002 by 9.30 am. Nifty, after topping 11,000-mark at open, was trading at 10,944, up 115.15 points or 1.06 per cent.

Here are the five factors that helped the market fend itself against global selloff:

Booster for FPIs, domestic investors: What helped domestic stocks avoid any major selloff in global markets on Monday was the FM’s decision to withdraw enhanced surcharge levied on long and short-term capital gains, arising from transfer of equity shares, units of equity oriented mutual funds and units of business trusts. The finance minister has also promised a more comprehensive review of the recently imposed HNI surcharge on incomes in FY22. The development may bring back foreign flows into India.

Optimism ahead of RBI board meet: The Jalan Panel has submitted its report and the board of the Reserve Bank of India will consider the same today. The Jalan Committee was constituted to suggest appropriate reserves that RBI should maintain and dividends it should pay to the government. ETNOW reported that the panel has favoured transferring of RBI reserves, but in tranches.

Fall in crude oil prices: Oil prices fell, pushing US crude to its lowest in more than two weeks, as a ratcheting up of tensions in the US-China war knocked confidence in the global economy. Brent crude was down 89 cents, or 1.5 per cent, at $58.45 a barrel, having earlier touched $58.24, the lowest since August 15.

Booster to industries: FM announced upfront recapitalisation of Rs 70,000 crore for PSU banks, which is expected to induce additional lending and liquidity to the tune of Rs 5 lakh crore. A revision in one-time registration fees for automobiles has been deferred till June 2020. It could have a significant impact on auto demand in the short term.

Eyes on housing sops: The government will unveil a fresh set of measures by the middle of the next week, aimed at resolving the problems faced by homebuyers and another set of steps to take care of pending issues hurting economic growth, finance minister Nirmala Sitharaman said.

Technical factors: Nifty50 on Friday formed a Piercing pattern, which has bullish connotations. In case Friday’s gains sustain, the initial targets would be around 11,059 level, while Friday’s low of 10,637 will be critical support, analysts said.

Source: Economic Times