Stock Market: Dollar on crude path, but party still goes on bourses

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By S Jha

New Delhi, September 6: Indices on Wednesday staged smart recovery on the strength of the retail investors raising cheers to the India story, extending momentum in the markets since the release of the GDP growth data for the first quarter of the current fiscal. Nifty staged a recovery of not less than 120 points, while Bank Nifty almost erased all the losses of the day.

The foreign institutional investors continue to sell the Indian equities, as the reported another sell in the cash market of over Rs 3000 crores. Their domestic counterparts were also marginal seller in the day on the bourses.

The crude oil price spiked to $90 per barrel after Russia and Saudi Arabia agreed for production cut. The move strengthened the prices of the Brent Crude oil in the international market. Besides, dollar also gained strength. Both the factors are conventionally known to be negative for the equity market, while also being red herrings for India for being a net importer of the crude oil, while trade takes place in dollar. Also, the FIIs have by nature in the habit of selling Indian equities when dollar gains strength as part of their arbitrage strategy.

Yet, the retail investors continue to bring money on the board to keep the bourses rising. Nifty finally reclaimed the 19600 level, which according to chartists is a sign of strength for the index. Bank Nifty was in the firm hand of the HDFC Bank, which rallied strongly to give support to both the Bank Nifty and Nifty. HDFC Bank briefly touched the level of Rs 1600.

The profit booking in the IT and metal counters dragged the market. The heavyweight IT and metal stocks ended in the red amid profit booking, which came on the back of a strong rally, while taking cues from China and NASDAQ rally. Telecom sector was buzzing in the day with the likes of Vodafone, Bharti Airtel, MTNL, and others making strong gains.

Tata Consumer rallied strongly on the back of a speculative news that the company was in talks to buy out Haldiram. However, both the companies denied the news after the market hours. Also, the gas-based firms were trending on the bourses.