The shares of capital market stocks surged on September 1 amid a broader uptrend in the markets. The sharp rise in the share prices pushed the Nifty Capital Markets index up around 2.5 percent to snap a four-day losing streak.
Nifty Capital Markets index was trading in the deep green at around 4,193 in the morning trading hours of Monday, after closing in the red for the entire holiday-shortened last week.
Here are some of the key reasons behind the sharp rise in the capital market stocks:
Markets in green:
After three consecutive sessions of closing in the red, benchmark indices Sensex and Nifty were trading in green as strong GDP numbers and other key factors boosted investor sentiment. Sensex gained over 300 points (0.4 percent) to hover near 80,100, while Nifty 50 rose over 100 points (0.4 percent) to reclaim the 24,500-mark.
The optimism in the stock markets could have provided a boost to the capital market stocks.
Rising gold, silver prices:
Gold and silver prices have been rallying over the past couple of sessions, as rising global uncertainties polished the safe-have appeal of the precious metals.
Gold’s future contracts with October expiry on the Multi Commodity Exchange (MCX) hit a fresh all-time high of Rs 1,05,937 per 10 grams today. Silver futures with December expiry were also at a lifetime high level of Rs 1,24,470 per kilogram on MCX.
The sharp rise in the metal futures may have boosted the share price on MCX, which is up around 5 percent.
"Along with increasing rate cut expectations, tensions between Israel and Gaza and other geo-political tensions and the tariff escalations are continuously supporting buying in bullions, as increased expectations of a U.S. Federal Reserve interest rate cut this month lifted bullion's allure. U.S. consumer spending increased solidly in July while underlying inflation picked up as tariffs on imports raised prices of some goods, but that data will probably not prevent the Fed from cutting interest rates this month...Increase in festive and wedding demand, ETF buying and increased premiums in China are some of the additional factors supporting gold's bull run," said Manav Modi, Analyst of Precious Metal - Research, Motilal Oswal Financial Services.
NSE revises quantity freeze limits for index derivatives:
Effective from today, NSE has revised the quantity freeze limits for index derivatives contracts. As per the revised framework, the applicable freeze limits for key indices will be: Bank Nifty at 900, Nifty 50 at 1,800, Finnifty at 1,800, Nifty Midcap Select at 2,800, and Nifty Next 50 at 600.
Under the earlier circular effective July 1, the limit was lower for Bank Nifty at 600. The latest revision effectively increases the permissible order size for Bank Nifty futures and options, while retaining the freeze limits for other contracts.
Quantity freeze limits act as a safeguard to prevent erroneous or abnormally large orders that could disrupt market stability. By increasing the ceiling, NSE can see some larger trades being placed in the stock market. This may have had an impact on the capital market stocks today.
Value buying:
The capital market stocks have seen strong downturn in the recent days, tracking the overall the downturn in the stock markets. After a four-day fall, investors may have now resorted to value buying. The stocks see heavy volumes today, with nearly 3 lakh shares of Anand Rathi being involved in active trade in just two hours into the session. This is around 3 times that of its 10-day average volumes.
MCX and Anand Rathi Wealth shares gained around 5 percent each to trade at Rs 7,754 apiece and Rs 2,929 apiece respectively. The shares of Bombay Stock Exchange (BSE) and KFin Tech shares jumped nearly 4 percent each.
Motilal Oswal Financial Services shares rose over 3 percent, while Central Depository Services (CDSL) and CAMS shares were up over 2 percent each. NAM India, Angel One and Indian Energy Exchange (IEX) shares were up around 2 percent each, while UTI AMC, 360 One WAM, HDFC AMC and Nuvama shares were up around 1 percent each.
Newly-listed NSDL, which is not part of the index, gained around 3 percent.
Also read: Our LIVE blog on stock market updates
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