FPIs turn net buyers: Sensex soars 1,040 points as bulls return
The equities staged a sharp recovery on Wednesday and hit a three-week high, as commodity prices declined and positive cues from global markets improved the investor sentiment. Crude oil prices closed below $100 per barrel on Tuesday for the first time since February, after scaling a 14-year high on March 8. Even as the expected tapering by the Federal Reserve remains an overhang for the markets, investors expect policy normalisation to be done smoothly. With the outbreak of fresh Covid cases in China, the authorities have announced a fresh stimulus package, which also boosted the sentiment.
Foreign portfolio investors (FPIs) turned net buyers on Wednesday, having bought equities worth $40.91 million, against domestic institutional investors’ purchase of $101.29 million, provisional data on the exchanges showed.
Today’s movement was a snap rally followed by what happened in the US overnight after a fall in crude prices and widely-covered manufacturing data came weaker than expected. This eased fear about an aggressive rate hike by the Federal Reserve. Also, a strong recovery in the Chinese market boosted the sentiment. Given the global situation and uncertainty, policy normalisation will be done in a smooth and calibrated manner, and we can expect a 25 basis points (bps) hike with a ‘wait and watch commentary’,” Aishvarya Dadheech, fund manager, Ambit Asset Management, told FE.
The Sensex closed higher by 1,039.80 points or 1.9% at 56,816.65 – with 28 of its constituents ending in the green. The broader Nifty-50 ended 312.35 points or 1.9% higher at 16,975.35 – its highest level in 14 trading sessions. The broader markets also advanced in line with the benchmark indices. The BSE midcap and smallcap closed higher by 1.8% and 1.5%, respectively. Easing oil prices also strengthened the rupee. On Wednesday, the local currency jumped 41 paise against the greenback to end at 76.21.
The markets in other Asian countries also closed sharply higher, with shares in China leading the region after announcement of a stimulus rollout amid rise in Covid-19 cases. The Shanghai Composite ended higher by 3.5% while Hang Seng and Nikkei 225 gained 9.1% and 1.6%, respectively. “Global markets were positive after the China government announced that it would roll out stimulus to boost the economy following outbreak of fresh corona cases. The Nifty is marginally below 17,000 mark and is now above the 200 DEMA and also its resistance zone of 16,800. Even the India VIX has cooled off significantly to 24.12 from a high of 33.97, thus supporting the bullish sentiments. The markets would now be closely watching the outcome of US Fed meeting which would give direction to global interest rates,” said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.
All the sectoral indices on the BSE ended in the green, with realty and metals surging the most. While the BSE Realty added 3.7%, metal and oil & gas rose 2.6% and 2.2%, respectively.