Indian stocks buck trend after Chinese policy punch hits Asia
India’s stocks bucked the trend on Wednesday while all across Asia, markets were rattled after Chinese policy makers sucked cash from the banking system to curb lending in a bid to scale back the growth stimulus set in motion amid a global downturn.business Updated: Jan 13, 2010 21:18 IST
India’s stocks bucked the trend on Wednesday while all across Asia, markets were rattled after Chinese policy makers sucked cash from the banking system to curb lending in a bid to scale back the growth stimulus set in motion amid a global downturn.
The local markets bounced back after falling earlier in the day in line with global trends.
The BSE Sensex and the National Stock Exchange’s benchmark index Nifty both ended up higher by 0.5 per cent while the Shanghai Composite plunged the most in Asia, dropping by 3.1 per cent.
China’s central bank raised the proportion of deposits that its banks must keep as reserves from 15.5 per cent to 16 per cent.
In India, the mood was upbeat in the wake of strong industrial growth data this week.
“At a normal time, it would have impacted the Indian markets but the strong IIP (Index of Industrial Production) numbers, export data, and good corporate results coming in — are all providing support to the Indian market and it is showing strength,” said Vinay Gairola, managing director of Atlantis Fund Advisors India.
The Chinese event was more of a long-term signal.
“In real terms it does not have an implication but this is being seen as the first step towards withdrawal of stimulus by China and there may be more such rate hikes going forward,” said the head of equity research of a global financial services leader on condition of anonymity.
In Europe, some markets fell but others remained flat. The European markets had slipped on Tuesday on account of the weak results announced by Alcoa, the leading producer of primary aluminium. Even in the US, Dow Jones fell 0.7 per cent on Tuesday.
Experts are of the opinion that liquidity absorption by China will not have much impact on the global recovery.
“Withdrawal of stimulus should be seen more as an action taken because things are getting better rather than things getting worse,” said the head of a leading mutual fund.