The benchmark Sensex
rebounded 1,000 points in intra-day trade before settling at 37,494 — 793 points or 2.2 per cent higher. The Nifty 50 index ended the day at 11,058 — up 229 points or 2.1 per cent. This was the highest single-day gain since May 20, when both indices had surged more than 3 per cent after exit polls showed that Prime Minister Narendra Modi’s government would be reelected.
On Monday, the rupee
closed at 72.02 per dollar, 0.5 per cent weaker than the previous close of 71.66 a dollar. Domestic gold prices rose 2.5 per cent or Rs 960 to Rs 38,560 per 10 gm. This is an all-time high.
had briefly slipped into the negative zone in early trade on Monday amid a sharp sell-off in Asian markets
despite a slew of measures announced by Finance Minister Nirmala Sitharaman
on Friday to boost the banking, auto and other sectors reeling from a slowdown. The sell-off in the peer markets was sparked by US President Donald Trump on Friday hiking tariffs on Chinese imports.
However, global investor sentiment improved through the day after Trump, who is attending the G7 meet in France, announced that the US and China would resume trade talks. This optimism was reflected in European markets and a huge jump in Dow Jones futures, triggering a bounce in domestic equities.
Indian markets, in fact, outperformed most global peers.
FPIs sold equities worth Rs 752 crore on Monday, while domestic investors bought shares to the tune of nearly Rs 1,300 crore. The selling by overseas investors dashed hopes of a turnaround in FPI sentiment following the withdrawal of surcharge.
Experts said while the move was a big positive, FPI buying will remain muted until there is an earnings revival.
“The June quarter earnings season was lacklustre, and high-frequency indicators suggest income uncertainty and hence weak spending intentions among consumers. Global factors such as the most recent escalation in the US-China trade tensions have turned more unfavourable,” said Eleswarapu.
Financial and realty indices rallied sharply — nearly 4 per cent each, while the auto index gained only marginally despite the measures announced by the government.
Twenty-two stocks in the Sensex
gained, with YES Bank gaining the most at 6.3 per cent. HDFC rose by 5.24 per cent. Bajaj Finance, HDFC Bank and ICICI Bank rose by more than 4 per cent.
“Two issues were bothering the markets in the past two months. One was related to the surcharge, and the other was related to the continued slowdown. The concerns associated with FPI surcharge have been alleviated. And on the slowdown, a beginning has been made,” said Rajat Rajgarhia, chief executive officer, institutional equities, Motilal Oswal Financial Services.
Economist are of the opinion that there is not much room available for the government to provide a fiscal stimulus as there could be pressure on the revenues because of sluggish economic growth. Fears of a global recession and escalated trade war between the US and China have also affected sentiment.
Analysts feel that the government measures will have only a short-term effect as these are unlikely to meaningfully boost corporate earnings.