Strong global cues coupled with the positive momentum created by a benchmark rate cut on Tuesday helped the benchmark BSE Sensex close 66 points higher, its third straight day of gains, powered by software and pharma stocks despite HCL Tech’s revenue warning.
It was off to a solid start, but gave up a big chunk of its leads in part due to late sell-off following a drop in India’s manufacturing activity.
Profit-booking in banking, auto and realty stocks ensured the 30-share index barometer ended with a modest gain of 66.12 points, or 0.25%, at 26,220.95.
This is its strongest close since 26,283.09 on August 31. The index has added almost 605 points in the last three sessions since RBI announced the policy rate cut.
The NSE Nifty was no exception to profit-booking, which slipped before settling higher by 2 points, or 0.03%, at 7,950.90.
Investor appetite returned after RBI governor Raghuram Rajan on Tuesday pulled off a surprise by announcing a bigger-than-expected benchmark rate cut of 50 bps to 6.75% -- the lowest in four and a half years -- to spur growth.
However, selling came to the fore after data showed that India’s manufacturing activity in September expanded at the slowest pace in seven months.
According to Nikkei PMI survey, India’s manufacturing sector output slipped to a seven-month low of 51.2 in September as order flow turned sluggish amid a “difficult economic climate”.
A firming trend in Asia and a higher opening in Europe following overnight gains on the Wall Street gave investors a lot to look forward to as they lapped up recently beaten-down stocks, which boosted sentiment.
An appreciating rupee, which strengthened to 65.51 against the US dollar, kept the momentum going. Some other macro parameters held up well as fiscal deficit for April-August narrowed to 66.5% of the full-year target and infrastructure output grew 2.6% in August.
On a weekly basis, both BSE Sensex and NSE Nifty surged 357.45 points (1.38%) and 82.40 points (1.04%), respectively.
“Indian benchmarks traded in a narrow range throughout the day. Firm global markets supported the indices as investors preferred to unwind positions ahead of the long weekend. Strong rupee kept the sentiment positive,” said Gaurav Jain, director, Hem Securities.
Lupin blazed a trail, up 3.62%, on expectations of bullish September-quarter earnings.
Other Sensex gainers were Sun Pharma, TCS, Dr Reddy’s, L&T, ONGC and Infosys. Sectorally, BSE healthcare was in pink of health as it rose 1.46%, followed by consumer durables, capital goods and technology.
Foreign investors net bought shares worth Rs 116.08 crore Wednesday, data showed. The market will remain shut tomorrow on account of Gandhi Jayanti.
HCL Tech, whose financial year begins in July, on Wednesday said its Q1 FY16 dollar revenues would be impacted adversely to the tune of 80 basis points on account of a sharp depreciation of multiple currencies against the greenback.
Asian markets ended firm as better-than-expected Chinese manufacturing data for September helped calm fears about the economic downdraft in the world’s second-largest economy. European shares were trading mixed.
The small-cap and mid-cap indices jumped 0.20% and 0.18%, too. Trading in US index futures pointed to a higher stock opening.
Veracity Group CEO Pramit Brahmbhatt said, “Today, there was not much action in the local equity market ahead of a long weekend as tomorrow local markets will remain closed due to Gandhi Jayanti, which has cut short the week.”
Investors also preferred to trade cautiously ahead of US non-farm payroll data due for Friday, which will determine the road ahead for the market. Of the 30-share Sensex pack, 16 ended in the green.
“Domestic inflows are holding the market which continues to be positive with constant increase in exposure. Currently, FIIs are focusing more on developed market than EMs due to the slowdown in economies,” said Vinod Nair, hhead-fundamental research, Geojit BNP Paribas Financial Services.
The market breadth remained positive as 1,377 stocks surged while 1,312 lost while 130 ruled steady. The total turnover dropped to Rs 2,937.37 crore, from Rs 4,344.13 crore on Wednesday.