The strong bout of buying that saw the benchmark BSE-Sensex going past the 17k mark sustained itself during the closing stages. As a consequence, indices in the Indian stock market
ended rather strong in today's trading session. Gains on the Sensex came in at around 270 points whereas NSE-Nifty closed higher by around 90 points. BSE-Midcap and BSE-Small cap indices also flexed their muscles and ended more than 2% higher. Advance to decline ratio on the Sensex came heavily in favour of the former with more than three stocks gaining for every one that declined.
While most Asian indices closed strong today, Europe too is trading in the green currently. The rupee was trading at Rs 45.2 to the dollar at the time of writing.
Today's gains saw the market snap its six day losing streak that was brought about by macroeconomic concerns over the developed world. Besides bargain hunting what also led to the rally was the statement yesterday by the US Fed that it will keep interest rates at record lows right until 2013. What is more, the Fed also proposed taking further action if required. Thus, with the world's most powerful authority promising to stand by and pump cash if the situation called for it, investors across the globe gained in confidence and scooped up beaten down stocks. However, we are sceptical whether the rally will sustain itself. Having said that, any meaningful dip in Indian stocks should be seen as an opportunity to buy into the long term India growth story.
Auto stocks closed quite strong today with leading gainers being Tata Motors, Maruti and M&M. The buying had to do more with perhaps the overall positive sentiment as news from the sales front continues to be bleak. As per reports, impacted by the non-stop rate hikes by the Indian central bank, domestic passenger car sales numbers for July took a hit to the tune of nearly 16% YoY. Passenger vehicles (includes cars + SUVs and the like) sales on the other hand, fell by 9% YoY. The two wheelers on the other hand grew 13% YoY and showed little signs, if any, of interest rate hardening. With inflation expected to continue to remain firm for few more months to come, there seems to be little respite for passenger car manufacturers. Long term however, the outlook remains quite bright but the players may have to watch out for competitive intensity.
REC, the state run financier to utilities and electricity boards announced its June quarter results today. The company witnessed a growth of 13% in net profits on a YoY basis during the quarter. This came on the back of 23% growth in total income. The stock closed more than 1% higher on the bourses today.