After plunging in early trade in a knee-jerk reaction to Greece’s ‘no’ to euro zone bailout conditions, Indian stock market on Monday staged a remarkable rally in late-afternoon trade, with the benchmark Sensex rallying 434 points from the day’s low level to end with a gain of 115.97 points at 28,208.76.
The rupee also bounced back in a volatile trade and ended higher by 4 paise to 63.40 against the US currency after falling 25 paise to 63.65 against the dollar in the morning session.
Oil prices fell more than 3 per cent after Greece rejected debt bailout terms and China rolled out emergency measures to support its stock markets, adding to concerns about demand at a time of global oversupply. Benchmark Brent crude oil fell $1.42 a barrel to a low of $58.90 before recovering a little to around $59.00 by 0925 GMT. The result of Greece’s referendum put in doubt its membership in the euro, pulling down the single currency euro against the dollar.
While global markets sank on Monday after voters in Greece rejected austerity plans demanded by international creditors, casting doubt on the country’s future in the euro zone, the 30-share Sensex of the BSE started off sharply lower at 27,857.2 and moved between 27,774.8 and 28,235.31 before ending at 28,208.76, a gain of 115.97 points, or 0.41 per cent.
The broader Nifty Index of the NSE climbed 37.25 points, or 0.44 per cent, to settle at 8,522.15.
Benchmarks in Asia and Europe fell sharply and US stock futures also declined. Tokyo’s Nikkei 225 index dropped 2.1 per cent to close at 20,112.12. In Hong Kong, the Hang Seng index fell 3.2 per cent to close at 25,236.28.
A sharp rebound in local equity markets along with robust capital inflows predominantly weighed on the rupee, despite strong dollar overseas.
When stocks bounced back, the rupee also recovered. RBI Governor Raghuram Rajan last week said India will see only limited impact of the debt crisis in Greece as the country has little direct exposure to the European nation and has enough buffers to withstand such shocks.
Jayant Manglik, President, Retail Distribution, Religare Securities, said, “much to the participants’ surprise, equity benchmarks, after a weak start, gradually recovered from the day’s low on Monday and ended in green amid global uncertainty.
Like other global markets, the initial reaction to Greece voting, where they rejected conditions of a rescue package from creditors on Sunday, was negative on the domestic front. Depreciation in Indian rupee against dollar was also dampening the markets sentiment.
But noticeable buying interest across the board not only helped index to pare losses but end the day in green as well.”
Analysts said the failure of Greece is not a big event for the Indian economy, as most of its debt is owned by the government of other countries.