Markets Close Positive As Rupee Recovers Partially

The Indian markets make a surprising comeback today. The BSE Sensex ended with 0.51% gains from yesterday's closing, while Nifty surged 0.44% by the end of the day. The positive sentiment was mainly created by the outstanding performance of the state-owned lender SBI. The rupee, which has crossed the 54.70 mark against the dollar was seen recovering and is near 54.46 at this time. Earlier, with the kind of slide the rupee showed, we thought that it may touch 55 against the dollar in the next few days. This recovery of the currency also helped the market to close in positives.

Globally, there seems to be a negative sentiment holding investors back from pouring money in equities. Major selling pressure was seen on the Nikkei, which posted negative 3.08% returns. The Shanghai and Hang Seng markets were also down by over 1.3% each. The European markets sank further, as the Euro zone debt and the political crisis are further haunting the economic growth of the region. Besides, 16 Spanish banks were downgraded yesterday by the credit rating agency Moody’s.

Meanwhile, Barclays Capital has said that the rupee may hit the 56 level in the short term and the 48 level in a year’s time. Various global and domestic factors are currently weighing high on the currency, and this has a direct impact on the equity markets. According to the German finance minster, the Euro zone market turmoil will last for another 12-24 months, which means that the equity markets will remain under pressure for quite some time.

On the sectoral front, Bankex rose sharply as SBI posted handsome growth in its earnings. The PSU bank beat the street's estimates with a net profit of Rs 4050 crore in the Mar quarter. This was helped by higher interest income and lower provisions for non performing assets. The FMCG index also rose by 1.14% as investors turned bullish on ITC. Other FMCG stocks such as Dabur India, Godrej Consumer Products and United Spirits were also up over 1% each. The Auto index took the greatest beating mainly due to the weak outlook for the auto industry. Tata Motors, which has been dumped by investors for lower bids, lost another 4% today.

Among the Sensex stocks, besides SBI, Sterlite Industries also gained 2.38%. ICICI Bank rose by 2.26%, while HDFC Bank rose by 0.6%. From the Auto stocks, only M&M ended the day in gains. In IT, Wipro and Infosys were seen in the gainers list, while TCS was in the other half of the list.

The shares of Pantaloon Retail have surged by 5% after the promoters' statement that the company will not be sold and it has a very bright future. National Alluminium Company surged by 4.45% today. Mangalore Refineries also gained 4.4% by the end of the day.

The market sentiment was mainly negative for the entire day, as 52% stocks of the total traded stocks declined in value.

The markets have tanked nearly 1% in this week. The rupee has also been seen hurrying up to the 55 mark against the dollar. With the all the fundamental factors at a low, there seems no positive news coming from anywhere. The lower IIP numbers and higher inflation numbers do not make a case of a rate cut for the RBI, and the concerned people have reiterated that there is less scope for the central banker to slash the rates. The erosion of the markets this week may continue for some time as the markets are still to discount the Greek crisis, the downgrade of the Spanish banks as well as the free fall of the rupee. Investors must take a cautious approach while investing in the markets.