Mumbai: Capital infusion in banks, clarity on retrospective tax on capital gains and expectations of a rate cut by the apex bank cheered investor sentiments and boosted Indian equity markets on Friday.
The positive cues propelled the barometer 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE)- up by 367 points or 1.32 percent during the mid-afternoon trade session on Friday.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) also made gains and was trading- 98.40 points or 1.17 percent up at 8,520.20 points.
The S&P BSE Sensex which opened at 27,814.51 points, was trading at 28,072.29 points (1.30 p.m.) up 366.94 points or 1.32 percent from the previous day’s close at 27,705.35 points.
The Sensex so far touched a high of 28,089.50 points and a low of 27,814.51 points in the intra-day trade.
According to analysts, Indian markets opened in the green tracking SGX Nifty, after it made gains worth 142 points on the last day of July series F&O (futures and options) expiry on Thursday.
There was a mild up-tick in the roll-over of F&O positions after Thursday’s expiry which stood at 61.7 percent, when compared to last month’s data. This shows a return of confidence in the investors.
On Thursday, global cues also supported the markets post Federal Open Market Committee (FOMC) meet in which the US Fed decided to keep rates unchanged.
“The news of capital infusion in the banking sector by the government, this lifted the banking index which drove prices. Banking sector’s first quarter performance has been better-than-expected with bottom lines of many lenders improving,” Anand James, co-head, technical research desk, Geojit BNP Paribas, told IANS.
“The government’s clarification on the recommendations made by the Justice A.P.Shah committee on minimum alternate tax (MAT) and the P-Notes also calmed investors anxiety.”
On Thursday, SEBI (Securities and Exchange Board of India) chairman clarified that the SIT (special investigative team) appointed by the Supreme Court on black money did not recommend a ban on P-Notes.
Investors were anxious as the SIT had recommended that the participatory note, or P-Note, route of overseas funds investing in Indian stocks be stringently regulated.
James pointed out that the markets were also optimistic of a rate cut in the upcoming monetary policy review by the Reserve Bank of India (RBI) which is scheduled for August 4.
India Inc. is demanding a rate cut as it believes that this may be the last time in this calendar year for RBI to ease lending before inflation spirals up again and the US Fed decides on its own rates in September.
Sector-wise, healthy buying was observed in banking, healthcare, automobile, capital goods, metal and fast moving consumer goods (FMCG) stocks.
The S&P BSE banking index zoomed by 395.94 points, the healthcare index rocketed by 297.67 points, automobile index augmented by 288.17 points, capital goods index was higher by 186.87 points, metal index rose by 122.50 points and FMCG index gained by 101.59 points.