Sensex ends up 359 pts: Advantage India as inclusion of China shares in MSCI delayed

Domestic equity markets staged a strong bounceback in a major relief rally on Wednesday, helping the benchmark Sensex overcome six sessions of losses, as investors cheered the US index provider MSCI’s decision to delay inclusion of Chinese ‘A’ shares in its emerging market index, thereby boosting the prospects of more foreign fund inflows into the domestic market going ahead. A decision to include domestic Chinese stocks in the index would have injected an estimated $400 billion of funds from asset managers, pension funds and insurers into mainland China’s equity markets over time, according to a Reuters report. [caption id=“attachment_2288968” align=“alignleft” width=“380”]  Reuters[/caption] In tandem with the weak market sentiment, foreign investors had pulled out funds worth Rs 2,648 crore from Indian equities in last six trading sessions, and a proposed rejig in MSCI index portfolio to include Chinese shares could have triggered massive fund outflows from here, feared market experts. “What today we saw was a strong relief rally because of MSCI index defering the inclusion of Chinese shares in its emerging markets index portfolio. The move was a welcome one for Indian markets, as we already saw strong foreign fund selling in last few sessions. We may see kind of more recovery happening in next few sessions, and Nifty would move in a 8,000-8,400 range. For me, next big trigger will how monsoon pans out…this will also provide some direction to the market. Also, crucial will be monsoon session of the parliament where we can hope for some crucial bills getting passed,” said Deven Choksey, managing director, KR Choksey Securities. Finally, the 30-share S&P BSE Sensex ended the session at 26,840.50, up 359.25 points, or 1.4 percent from previous close. Intra-day, the index gained 453 points before shedding some gains towards the fag end of trading session. Similarly, the broader 50-share CNX Nifty closed at 8,124.45, up 102.05 points, or 1.3 percent from previous close. Prior to his, the Sensex lost more than 1,300 points as flurry of negative news such as deficient monsoon forecast, likely pause in interest rate cuts, higher inflation woes and flight of foreign capital unnerved investors. Market breadth ended upbeat with 1,702 stocks advancing against 939 declines on BSE. Banking shares were in limelight, extending upmove for the second straight session, especially, after the RBI allowed banks to convert debt into equity in the event of a company failing to repay its loans post the restructuring exercise. Among the banking shares, ICICI Bank rose 1.8 percent to Rs 292.40, HDFC Bank gained 1.5 percent to Rs 1,015.70, YES Bank moved up 1.2 percent to Rs 832.80, PNB added 1.1 percent to Rs 137.75, Axis Bank gained 1.07 percent to Rs 564.35 and SBI was up 1 percent at Rs 260.05. Investors also lapped up capital goods shares on hopes the surging order book position and the government’s increasing spend in the sector going ahead would spur earnings growth over the next few years. According to a Prabhudas Lilladher report, large project finalisation is taking time and they expect pick-up to happen over the next 2-4 quarters. The report also suggests that markets for power BTG/power T&D, renewable, railways, rods, genset was positive for the year ahead. In the capital goods space, shares of BHEL jumped 4.2 percent to Rs 251.40, Siemens gained 2.6 percent to Rs 1,350, L&T rose 2.4 percent to Rs 1,706.65 and Crompton Greaves was up 2.2 percent at Rs 164.55. Sugar stocks also gained traction after cabinet committee on economic affairs (CCEA) approved Rs 6000 crore worth interest-free loans to the sugar industry. Among the gainers, Bajaj Hindusthan Sugar shot up 10 percent to Rs 14.56, Simbhaoli Sugars rose 9.7 percent to Rs 10.26, Shree Renuka Sugars surged 7.6 percent to Rs 10.89, Bannari Amman Sugars added 4.6 percent to Rs 800 and Balrampur Chini Mills gained 2.7 percent to Rs 42.05.