Indian shares rose nearly 2.5% today at day’s highs gave up some gains on profit-taking in late trade. The Sensex rose as much as 776 points when it touched day’s high of 32,103, before ending 415 points higher at 31,743. The broader index Nifty ended 1.4% higher at 9,282, powered by gains in financial stocks after Reserve Bank of India launched a special liquidity facility for mutual funds to ease the pressure due to the coronovirus pandemic.
“Once again the Nifty struggled to pass through the stiff hurdle of 9400 due to some profit taking,” said Sameet Chavan, chief Analyst-Technical and Derivatives, Angel Broking.
The RBI today announced opening of a special liquidity facility for mutual funds of ₹50,000 crore to ease liquidity strain. The Nifty Bank index rose 2.5% with Axis Bank and Kotak Bank surging 5% to 6%. Asset manager Nippon Life India Asset Management Ltd soared 11%, while HDFC Asset Management Company Ltd 5%.
“RBI’s liquidity initiative will ease pressure and help mutual funds to finance the redemption using this facility rather than selling existing papers at a discount and denting its Net Asset Value. We believe, that this measure will stabilize the performance of short-term debt funds and improve investor sentiment about the debt market,” said Amit Singh, head of Investica.
Investor sentiment was also helped by gains in global markets after Bank of Japan on Monday expanded monetary stimulus for the second straight month to ease corporate funding strain. IT firm Mindtree Ltd surged nearly 13% after reporting a better-than-expected profit for the March quarter.
The rally was broad-based as both midcap and smallcap indices also ended with healthy gains of 1.3-1.4%.
Here is what analysts said about today’s market action:
Ajit Mishra, VP – Research, Religare Broking Ltd.
“The Indian markets had a promising start to the week largely led by a surge in banking and financial stocks following RBI’s liquidity support to the stressed mutual funds. Going in to the week, on the domestic front, all eyes will be on earnings announcements and news related to the coronavirus front. Meanwhile, monthly derivatives expiry could further add to the volatility. On the global front, Fed meeting (April 28-29th) would be on investors’ radar as update w.r.t Fed’s recent actions to combat COVID-19, as well as economic outlook, will be keenly watched. Further, the announcement of US Q1 GDP data (on April 29th) will also be closely tracked. Nifty has been hovering in roughly 350 points range i.e. 9000-9350 for the last two weeks and we feel banking holds the key for either side breakout. Traders should continue with hedged bets and wait for further clarity.”
Vinod Nair, Head of Research at Geojit Financial Services
“Markets closed positive in sync with the global markets. News regarding the RBI liquidity facility for mutual funds and stimulus packages from central banks around the world provided some positivity to the markets. Investors are looking towards earnings results coming out later and during the week for more clarity on the specific sectors. Credit risk concerns remain and investors are advised to remain cautious.”
S Ranganathan, Head of Research at LKP Securities.
“Market rose today despite profit taking in late afternoon trade led primarily by high quality financials, consumer and staples. We witnessed select buying in metal stocks too. The key highlight of today’s trade was the spirited buying witnessed in select small and midcap stocks across sectors as HNI sought value in them”.
Sameet Chavan, chief Analyst-Technical and Derivatives, Angel Broking
“Today, our markets kickstarted the new trading week with a good bump up of more than 100 points in Nifty. In fact, the buying momentum accelerated right from the word go and during the first half, Nifty hastened beyond the 9350 mark. However, once again the Nifty struggled to pass through the stiff hurdle of 9400 and hence, due to some profit taking, the index closed tad below 9300.
“We have been mentioning since last few days that the market has slipped into a consolidation mode and hence, despite valiant attempts around 9400, the Nifty is unable to traverse this sturdy wall. It appears that the market is awaiting for some strong trigger to come out of this recent congestion. In our sense, if Nifty has to give a breakout, it should happen in next 2-3 sessions. If it fails to do so we may see long consolidation (due to lower market participation) or it would result into a decline towards 9000-8900 levels. Thus next couple of sessions would be quite crucial for our markets.”
