The equity benchmarks recovered post noon on Friday after early losses, with the Sensex rebounding 400 points from the day’s low and the Nifty crossing the 24,700 mark, supported by buying in auto shares and positive global trends.
After a volatile trade, the Sensex closed lower by 7.25 points or 0.01 percent at 80,710.76. In a see-saw trade, the barometer opened higher but slipped into the red in late morning deals. It hit a low of 80,321.19 in the afternoon session before paring losses in the pre-close session. The index gyrated 715.37 points between the day’s high and low. The Nifty eked out gains of 6.70 points or 0.03 percent to close at 24,741.
Key factors behind the rebound:
1) Positive Global cues: Asian markets traded higher, with South Korea’s Kospi, Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng in positive territory. US stocks ended higher on Thursday, while Wall Street futures also indicated a firm opening.
2) FII activity: Foreign Institutional Investors (FIIs) sold equities worth Rs 106.34 crore on Thursday, while Domestic Institutional Investors (DIIs) purchased shares worth Rs 2,233.09 crore. Strong DII inflows, along with smaller FII selling, supported the buying momentum in the market.
3) Crude oil decline: Brent crude futures slipped 0.18 percent to USD 66.87 a barrel. Softer crude prices ease concerns over inflation, improving sentiment in equity markets.
4) Auto stocks rally: Auto shares extended their gains for a third straight session after the GST Council, at its 56th meeting, announced a cut in Goods and Services Tax (GST) from 28 percent to 18 percent across key automobile segments. Mahindra & Mahindra and Ashok Leyland were among the prominent gainers.
5) Volatility index falls: India VIX, the measure of market volatility, eased 0.16 percent to 10.84. A lower VIX is seen as a sign of reduced investor anxiety, aiding market stability.
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