Sensex wipes out 200-point loss on rate cut hopes
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India's stock markets saw a dramatic turnaround, with the BSE Sensex wiping out over 200-point loss, to end with gains Monday. The Senses fell shy of the 16,000 mark, while the Nifty closed near the 4,850 mark.
Earlier, the Sensex had opened gap down tracking weakness in global markets. The Nifty index had slipped below the key 4,800 mark. The trigger for the global selloff came from the US, where American employers added just 69,000 jobs in May against estimates of 158,000 jobs.
Markets recovered post noon on hopes of a rate cut later this month. Reserve Bank Deputy Governor Subir Gokarn said that falling global oil prices as well as declining core inflation and growth in India gave the RBI room to adjust interest rates.
"There are expectations that the Reserve Bank will cut rates by 25-50 basis points later this month,” Ramanathan K, executive VP & CIO at ING Investment Management told NDTV Profit.
The Sensex closed 23 points or 0.15% higher at 15,988, while the broader Nifty index advanced 6.55 points to end at 4,848.
Rate sensitive stocks like realty (1.35%), banking (1.1%) and auto (0.78%) rebounded from the day's low. Energy (1.17%) and capital goods stocks (2.1%) also helped the benchmarks gain strength.
On the Nifty index, 24 of the 50 stocks closed in the green. Infra and cement major Jaiprakash Associates (4.8%) was the top gainer, followed by engineering and construction conglomerate L&T (3.4%). State run oil explorer ONGC (3.2%) and oil refiner BPCL (3.2%) was also among the top gainers.
PSU lender Bank of Baroda (3.2%) led the gains in banking stocks. Private banks like Axis (2.4%) also saw buying interest. Realty major DLF erased over 5% losses to end with 1.86% gains.
India's biggest power producer in the private sector Tata Power (-3.44%) was the top loser, followed by state run gas utility firm Gail India (-3.22%) and private steel major JSPL (-3.2%).
Commodity stocks have witnessed risk aversion on the back of uncertainty in global growth. Vedanta Group firm Cairn India (-3.1%), which is adversely affected when crude price falls, also closed loser.
The market breadth had improved substantially as compared to early trade, with 47% stocks ending higher on the BSE 500 index.
Markets in Spain traded with over 2.5% gains, helping sentiments on the Street. The CAC 40 index in France rose 0.50%. Asian stocks, however, closed with deep cuts.
