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Markets wipe off Brexit losses, remain bullish

By Porisma Pompi Gogoi and Rohit Vaid

Mumbai, July 2 (IANS) Positive global and local cues, amidst further clarity on Brexit modalities, catapulted the Indian equity indices to their new highs for the year during the just concluded weekly trade.

The equity markets rose for five consecutive sessions to gain around three per cent during the week.

The 30-scrip sensitive index (Sensex) of the BSE closed the week's trade with a massive gain of 777.91 points or 2.95 per cent at 27,144.91 points.

Similarly, the 51-scrip Nifty of the National Stock Exchange (NSE) surged to 8,328.35 points -- up 239.75 points or 2.96 per cent.

“While the previous week was almost like a Black Friday and as if the world was coming to an end because of Britain going out of EU, this week was nothing short of euphoric," said Pankaj Sharma, Head of Equities, Equirus Securities.

"Markets not just wiped off all the Brexit losses, but some of the sectors, segments and scrips went a lot further as well.”

The benchmark indices started the week on a flat note -- marginally in the green -- as investors' sentiments remained weak on account of Britain's vote to exit from the EU.

However, the Indian markets gained momentum as they took positive cues from resurgent Asian markets which shrugged off the global selloff stimulated by the Brexit.

Even the European markets recovered as global investors were hopeful that international central banks might go in for major stimulus measures to protect growth.

Besides, positive domestic macro-economic data, a firm rupee and healthy progress of the monsoon supported the upward trajectory of the markets.

On the domestic front, the government's decision to accept the Seventh Pay Commission's recommendations and other key economic decisions restored the risk appetite of investors.

The recommendations entail an additional expenditure of Rs 102,100 crore. This is expected to boost spending in several sectors like realty, consumer durables and non-durables.

In addition, robust macro-economic data, such as the Nikkei India manufacturing Purchasing Managers' Index (PMI) supported prices. The PMI rose to 51.7 in June.

On a weekly basis, the Indian rupee gained by 65 paise to 67.32 against a US dollar from its previous close of 67.96-97.

"The rupee has nearly recouped all of its losses post Brexit to end last week at 67.32/USD- post the initial knee-jerk impact," Bansi Madhavani, analyst, India Ratings and Research, told IANS.

"The rupee is likely to consolidate its gains over the coming week, though revival in foreign flows has still not been encouraging."

However, some gains were capped as investors turned cautious due to the F&O (futures and options) expiry on June 30 and chose to book profits.

“Indian markets edged higher after the Union Cabinet approved a long-awaited pay hike for government employees. The sentiment was also boosted by a global relief rally as the immediate impact of Brexit began to fade,” Vaibhav Agarwal, Vice President and Research Head at Angel Broking told IANS.

“With the futures and options (F&O) expiry on Thursday, the market witnessed higher volatility. Key benchmark indices registered modest gains on last trading day of the week.”

According to Nitasha Shankar, Senior Vice President for Research with YES Securities, broader markets outperformed the headline indices throughout the week and posted huge gains of seven per cent.

"The PSU bank index continued to rise, leading the bank index higher. All major sectoral indices ended the week with handsome gains. The IT Index was the lone trailing index," Shankar noted.

"Realty and FMCG (fast moving consumer goods) were top performing indices."

Sector wise, the oil and gas index was up 2.76 per cent, followed by the capital goods index (2.10 per cent) and the FMCG index (1.85 per cent).

On the other hand, the IT (information technology) index was down by 0.37 per cent and the TECK (media, entertainment and technology) index by 0.16 per cent.

Among the individual Sensex stocks, ONGC was the top gainer at 3.72 per cent, followed by BHEL (3.33 per cent), Larsen and Toubro (L&T) (2.97 per cent), ITC (2.84 per cent), and Dr Reddy's Lab (2.77 percent).

The losers were led by Tata Consultancy Services (TCS) (down 1.92 per cent), followed by Adani Ports (1.04 per cent), Coal India (0.97 per cent), Bajaj Auto (0.65 per cent) and HDFC (0.64 per cent).

The week saw a substantial inflow of foreign funds. The provisional figures from the stock exchanges suggested that the foreign institutional investors bought stocks worth Rs 686.28 crore during the week under review, while domestic institutional investors purchased scrip worth Rs 306.32 crore.

The figures from the National Securities Depository (NSDL) showed that foreign portfolio investors were net buyers of equities worth Rs 197.19 crore, or $30.32 million between June 27 and July 1.

(Porisma Pompi Gogoi and Rohit Vaid can be contacted at porisma.g@ians.in and rohit.v@ians.in)

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