August F&O series starts with a bang as Sensex, Nifty end above psychological levels

Domestic stocks rallied for the third straight session, with key benchmark indices, Sensex & Nifty, closing above their psychological levels and helping the markets erase all its losses incurred in the first two sessions of the week. [caption id=“attachment_2374006” align=“alignleft” width=“380”]  Reuters[/caption] Amid weak global markets, primarily the slump in Chinese equities, the Sensex crashed 653 points in first two sessions, but strong recovery in subsequent trades helped the index gain 655 points and end the week positive, albeit marginally higher. However, market analysts attribute the upsurge in today’s trades to the strong rollover position in the current (August) month from the last month with fresh positions being built indicating steady upmove in next few sessions before turning range-bound with a negative bias. Also, the retirement fund body, employee provident fund organisation’s (EPFO) decision to infuse funds into the equity market starting August 6 with an initial corpus of Rs 5,000 crore in the current fiscal reinforces the strength of equity markets as a good long-term investment avenue for better returns. Further, earnings numbers rolling in from select blue-chip firms continue to impress the street, particularly from the hugely stressed banking sector, giving investors a reason to cover their short positions. The 30-share BSE S&P Sensex finally ended the day above the crucial 28,000-mark at 28,114.56, up 409.21 points, or 1.5 percent from previous close. Intra-day, the index surged 456 points to touch the day’s high of 28,161.17 before trimming some gains towards the close. Similarly, the broader 50-share CNX Nifty closed above the 8,500-level at 8,532.85, up 111.05 points, or 1.3 percent. “The strong rollover position in the current month at 64 percent has been higher compared to 59 percent seen in the previous month. This shows that investors are taking fresh long positions on hopes of better economic prospects in the near term. Also, globally there haven’t been any major negative developments that could trigger a downfall. We expect, the markets to see some more gains before turning range-bound with a negative bias going ahead,” said Alex Mathew, head research at Geojit BNP Paribas. Market breadth ended positive with 1,658 stocks advancing against 1,213 declines on BSE. Banking stocks clocked strong gains as investors cheered ICICI Bank’s earnings while the government proposal to infuse Rs 70,000 crore in PSU banks over four years also added fizz to the sector. Shares of Bank of Baroda jumped 5.3 percent to Rs 177.40, SBI rose 5.2 percent to Rs 270.40 and ICICI Bank gained nearly 4 percent to Rs 302.50. The private sector bank came with a decent set of numbers in the April-June quarter with net profit for the quarter rising 12 percent on-year at Rs 2,976 crore even as provisions rising to Rs 955 crore from Rs 726 crore in the year. “The ICICI Bank April-June quarter numbers are decent. But it is early to say the worst is over,” said Vaibhav Agrawal, vice-president, research at Angel Broking. In the Sensex pack, shares of Coal India scaled up 4.5 percent to Rs 439.30, Lupin surge 4.3 percent to Rs 1,695.65, Dr Reddy’s added 4 percent to Rs 4,065.70 and HeroMoto Corp was up 3.4 percent at Rs 2,674.45. Others such as ITC, M&M, Gail, Tata Motors, Wipro, Axis Bank, TCS and Sun Pharma were up over 1-3 percent. Several realty shares maintained their upward bias amid rising hopes of a rate cut in the next week’s credit policy. As a result, Sobha Developers surged 6.4 percent to Rs 349.70, DLF rose 5 percent to Rs 114.80 and Unitech ended 2.7 percent higher at Rs 7.59.