Indian stocks rose for a second straight day as some investors bet there’ll be enough liquidity to support the economy as the nation gradually exits from the world’s biggest lockdown.
The S&P BSE Sensex climbed 2.1%, the most since April 30, to close at 30,818.61 in Mumbai, while the NSE Nifty 50 Index rose by a similar magnitude. Both measures have sunk more than 25% this year. The rupee fell 0.2% to 75.7975 per dollar, while the yield on most-traded 2029 bonds was little changed at 6.04%.
“Liquidity is going to be there for the near-term, which casts a perfect recipe for a risk-on trade,” said Sanjiv Bhasin, a strategist at IIFL Securities Ltd in Mumbai. “On the face level, the extension of the lockdown may have given weakness.”
The government has unveiled stimulus equal to 10% of the economy since February, while overseas investors have poured nearly $1.3bn into India’s equities this month as the Sensex’s 12-month estimated price-to-earnings ratio fell below its three year average.
“Many cities have opened up so investors believe the manufacturing activities can restart. Reopening optimism is giving comfort to the market,” said Chokkalingam G, chief investment officer at Equinomics Research & Advisory Pvt in Mumbai.
“A lot of investors missed the rally from March 23 bottom because they went by weak fundamentals and so now they’re coming back to see if they can minimise their losses for the year.”
With a lockdown through May 31 gradually being eased to allow some commerce, India has 106,475 Covid-19 infections and 3,302 deaths, according to data from John Hopkins University.
As the earnings season for the quarter through March continues, only five of the 20 Nifty 50 companies that have reported results so far have beaten analyst estimates.
Reliance Industries shares rose 1.8% as the company’s $7bn rights issue – its first share offer in about three decades – opened yesterday.
The price for rights entitlement settled at Rs212 a share, 40% premium over the previous close of about Rs152, according to the NSE.
The rights entitlement price is the difference between the previous day’s closing price – Reliance stock closed at Rs1,409 on Tuesday – and the rights issue price of Rs1,257 apiece.
More than 29mn of the rights entitlements changed hands, higher than Reliance’s share volume of 25.5mn on the NSE, the exchange data show
The offering tested the platform for trading rights entitlement launched by the market regulator earlier this year. The platform allows shareholders to give up their shares for a price. Until now, shareholders who didn’t wish to apply had no choice but to let their rights lapse.
Eighteen of 19 sector sub-indexes compiled by BSE Ltd gained, led a gauge of healthcare companies.
HDFC Bank Ltd contributed the most to the Sensex’s gains, while Mahindra & Mahindra Ltd’s 5.9% advance was the biggest. Bharti Airtel Ltd was the biggest drag and IndusInd Bank Ltd was the biggest loser with a 2.9% drop.
Meanwhile the rupee depreciated by 14 paise to 75.80 against the US dollar yesterday as headwinds due to US-China trade tiff and worries over the second wave of coronavirus infection weighed on investor sentiment.
Forex traders said positive domestic equities supported the local unit, while sustained foreign fund outflows, US-China trade tiff and concerns over coronavirus pandemic weighed on the local unit.
At the interbank foreign exchange, the rupee opened at 75.60, but pared the initial gains to finally close at 75.80, registering a fall of 14 paise over its previous close.
On Tuesday, the rupee had settled at 75.66 against the US dollar.
During the trading session, the domestic unit witnessed heavy volatility and saw an intra-day high of 75.60 and a low of 75.86.
Domestic bourses were trading on a positive note.
“The Covid-19 vaccine-trials temporarily excited the market. But there are headwinds due to ongoing US-China trade tiff and worries over second wave of infection.
Also, Reliance rights issue has opened, and we can see some FII participation in it in coming days which may limit the fall in rupee,” said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Gupta further noted that “technically, The USD/INR spot is trading in a very tight range of 75.25-76, and we expect it to remain in this until there are major cues. Either side breakout will give further clarity over the trend”.
from Gulf Times https://ift.tt/2AO2b5V
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