Moneycontrol
Sep 10, 2013 08:08 PM IST | Source: Moneycontrol.com

Nifty up 555 pts in 4 days; rupee, exports data, Syria aid

Short covering, banking & rupee measures by new RBI governor Raghuram Rajan and receding Syria concerns pushed the Sensex and Nifty higher by 1762.44 points and 555.3 points in four consecutive sessions.


Moneycontrol Bureau


The Sensex hit psychological 20000-mark while the Nifty too was not left behind as it touched the 5900 level Tuesday on appreciation in rupee, strong exports data and TRAI recommendations for telecom. Globally, better-than-expected Chinese data and waning of geopolitical risks from Syria lifted investors’ sentiment.


The Sensex gained 727.04 points or 3.77 percent to close at 19997.10, after hitting an intraday high of 20012.69.


The Nifty touched day's high of 5904.85, before ending with gains of 216.35 points or 3.81 percent at 5896.75.


Short covering, banking and rupee measures by new RBI governor Raghuram Rajan and receding Syria concerns pushed the Sensex and Nifty higher by 1762.44 points and 555.3 points in four consecutive sessions.


The uptrend seem to have changed sentiments a bit as some experts believe the worst is over for the market.


Ratnesh Kumar, MD and CEO, Standard Chartered Securities believes the worst for India is over atleast in certain aspects like the current account deficit (CAD). According to him, the market is on steadier ground after the better-than-expected July CAD figure and is likely to remain so until the September 17 Fed meet.


Meanwhile, Sandeep Shenoy of Anand Rathi Financial Services Shenoy is hopeful that the current rally seen in the market may take it to higher levels, but adds that the market is still not out of woods. He advises to trade cautiously.


Shenoy sees the market hovering in the broad range of 5,600-6,000 for the next two-three months given the lack of positive cues.


The rupee appreciated by 140 paise to close at 63.84 against the US dollar - highest closing level since August 23. The currency gained 380 paise in four straight sessions.


Inflow of foreign money was the real supportive factor today as foreign institutional investors have bought more than Rs 2,500 crore worth of shares, as per provisional data available on exchange's website. In four sessions, they purchased around Rs 4,500 crore worth of equity shares.


The next trigger for the market is likely to be FOMC meet on September 17. Even Raghuram Rajan's maiden RBI monetary policy on September 20 will be closely watched by investors.


Trade deficit of the country in August narrowed to USD 10.91 billion from USD 12.27 billion in previous month, supported by double digit increase in exports.


Exports rose by 12 percent to USD 26.14 billion in August from a year ago period of USD 25.83 billion while imports declined to USD 37.05 billion from USD 38.10 billion Y-o-Y.


Stock specifically, auto, capital goods and FMCG shares were major gainers today as these sectoral indices rallied 5-6 percent. Tata Motors was the biggest gainer with 10 percent gains after its UK subsidiary Jaguar Land Rover reported record sales performance in August.


Larsen & Toubro surged 7 percent as Goldman Sachs added the stock to its conviction buy list.


Both FMCG majors ITC and Hindustan Unilever gained 6 percent each while top telecom operator Bharti Airtel soared 8 percent after the telecom regulator recommended steep cuts in reserve prices for the next round of spectrum auctions.


Among others, HDFC, Infosys, HDFC Bank, M&M, Sesa Goa and Hero MotoCorp advanced 3.5-7 percent.


However, Dr Reddys Labs was the only loser in the Sensex, falling 0.76 percent. SBI and TCS closed flat with negative bias.


On the global front, European markets were trading one percent higher after Monday's comments from US President Barack Obama that Russia's plan to put Syrian chemical weapons under international control could be a breakthrough in the crisis, reported Reuters.


Asian markets ended at a 3-month high with the Shanghai, Nikkei and Hang Seng gaining 1-1.5 percent.


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Here is what market experts think of today’s rally.


Q: What has lead to this 750 point rally that we have seen any particular new flow triggers on the back of which we have seen this strong up move and do you see this rally continuing?


Deven Choksey, chief executive officer, KR Choksey : The market is driven by one fundamental and that is the rupee. The real value of the rupee as per the RBI inflation index management is somewhere around 58 against the dollar. If the corrective actions which are being taken correctly by the RBI, including giving the MNC companies to reinvest the dividend, I think such kind of major route prevents the money from flowing out of the country.


This would eventually strengthen the rupee. So, if it goes near to the real value of rupee, then, in such situations one might be seeing the rally continuing because most importantly, the foreign investors who are investing into the market, they certainly do not want to face any portfolio losses due to the currency. If the currency loss is not extended, in such a situation, buying would emerge. Maybe it is a little euphoric at this point in time but nevertheless the values are being selected based on the fundamental merits of some of the good companies.


Q: A lot of people viewed this up move as just a pull back rally in a bear market and hence they didn’t really participate in this up move of 700-750 points on the Nifty – from 5100 all the way from 5100 to 5900 – should someone look to buy more as a fresh position – what is your sense can we move higher?


Anand Tandon, chief executive officer, JRG Securities: Today’s move is obviously non-discriminating. There isn’t a single sector which looks like it is down. The sectors which had come down a bit are all on the way up. It looks more like an ETF buying.


I don’t think anything has changed substantially other than the fact that the oversold market has pulled back and that too globally. I think the initial euphoria is perhaps on the basis that we have hope that we have one more change in the policy maker which will help the market to do better. I think more such hopes over time that will get muted. So coming back to what h as substantially changed largely nothing. If one is buying then he/she is buying at their own risk.

Q: This rally has been very swift all the way to that 5900 level and many people initially were just looking at it as a pullback rally – is it just that, in an otherwise a weak market or do you think there are more legs to this rally and 6000 plus possible on the Nifty?


Parag Thakkar, head of sales, HDFC Securities: Yes. It is confidence on Indian currency coming back and that is why the entire trade which was happening from 60 to 70 against the dollar is reversing. All domestic linked stocks like banking, auto, FMCG, cement, everything is coming back.

There are few more legs to it but I would recommend that since the stock has run up very fast. In some of the sectors one should look at booking profits also at every rise from hereon.

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