Domestic stock markets on Monday rallied with broader sentiment underpinned by a continued recovery in Asian markets from Britain’s shock vote to leave the European Union and a pickup in monsoon across the country.
The Sensex ended higher by 133.85 points, or 0.49 per cent, at 27,278.76, its highest closing since October 26 last year. The Sensex had added 747.20 points in past five sessions. The NSE Nifty ended up 42.35 points, or 0.51 per cent, at a 10-month high of 8,370.70, its highest level since August 20. The rupee also firmed up by 5 paise to close at a two-week high of 67.27 on sustained selling of dollars by banks and exporters on the back of higher domestic equities.
According to latest reports, rainfall deficit shrank to 6 per cent, sharply down from 18 per cent in the first week of June, after substantial rains over the weekend. Mood was also decidedly upbeat after it emerged that central bankers across the globe are stepping up stimulus measures to offset concerns from the shock Brexit referendum, which sent global stocks higher. Other factors that buoyed the optimism included better chances of GST becoming a reality, the government’s approval to the 7th Pay panel award and several reforms including relaxation of FDI rules.
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Shreyash Devalkar, fund manager, BNP Paribas Mutual Fund, said, “the market sentiment got a fillip after monsoon picked up over the weekend, narrowing the rainfall deficit in the current season to 6 per cent, sharply down from 18 per cent in the first week of June. With the exception of the FMCG index, all other sectoral indices on the NSE traded in the green. PSU Bank, metal and media stocks lead the pack of winners with the respective indices on NSE gaining more than one per cent.”
“Besides firm global cues, IMD’s latest monsoon update triggered a robust start, but profit taking at the higher level capped upside in index. As anticipated, noticeable buying interest was seen in midcap and smallcap space, which kept the traders busy till the end. On sectoral front, PSU banks and realty topped the gainers list, followed by metal and media pack,” said Jayant Manglik, President, Religare Securities. Among the Asian markets, Hong Kong’s Hang Seng ended 1.27 per cent higher and Shanghai Composite rose 1.91 per cent.
However, the post-Brexit recovery across European markets stalled on Monday with major share indexes mixed and safe-haven demand for precious metals helping the price of silver surge to a near-two year high. Europe’s Stoxx 600 fell 0.4 per cent and London’s FTSE 100 fell 0.2 per cent with weaker financials offsetting gains from shares in mining companies.