Stocks bounce back as Russia eases standoff with Ukraine
Mar 04 2014 , Mumbai
After Monday’s 173-point fall triggered by the standoff between the two neighbours, the market bounced back in sync with a recovery in world shares after Russian president Vladmir Putin said there was no need to invade Ukraine.
Putin ordered his troops in military exercises to return to base in what was seen as a dampening down of immediate tensions in the east-west crisis. Emerging market currencies recovered with the improvement in risk sentiment.
All Asian and European markets recovered after Tuesday’s fall. Among the Asian indices, Hong Kong’s Hang Seng gained 0.70 per cent, Japan’s Nikkei 0.47 per cent while European indices Dax of Germany rose 2.04 per cent, France’s CAC 2.12 per cent. US stock futures rose, indicating that the S&P’s 500 index would rebound from its biggest loss in a month.
The S&P BSE Sensex ended the day at 21,209, recording its biggest daily gain since mid-January and also turning positive for 2014. Nifty closed at 6,298.
Banking, capital goods, realty, power and oil & gas stocks were among the top gainers. The top Sensex gainers were Hindalco (7.82 per cent), Sesa Sterlite (4.88 per cent), ICICI Bank (3.75 per cent), Axis Bank (3.29 per cent), Gail (3.07 per cent) and BHEL (2.58 per cent). BSE midcap and smallcap indices gained 1.31 and 1.03 per cent, respectively.
Foreign institutional investors were net buyers of equities worth Rs 185.61 crore. Domestic institutional investors sold stocks worth Rs 344.50 crore.
Vinod Nair, head of fundamental research at Geojit BNP Paribas Financial Services, said, “We just experienced a reversal of yesterday’s fall as investors bought into the easing of the Ukrainian situation as positive news emerged about Russia diluting its standoff.”
“Metals, banking, capital goods, power and consumer goods stocks saw strong buying, possibly in reaction to the positive PMI numbers announced on Monday,” Nair said.
NSE’s India VIX index, a measure of expected market volatility in the near future, was down 5.8 per cent to 14.39.
Dipen Shah, head of private client group research at Kotak Securities, said the market gained on the back of news flow that Russia had asked its troops in some parts to withdraw. “This gave the market optimism that the situation was likely de-escalating, though the risk of a confrontation has not died completely,” Shah said.
By the end of the first half of trading, the market had recouped all the losses of the previous session. Later the European markets opened sharply higher, which further boosted domestic market sentiments.
“The market will continue to watch the developments on the political front closely. Investors are betting on the formation of a stable government, which could put the infrastructure and industrial sectors back on track. This will provide better growth visibility on cyclical/investment-oriented sectors,” he said.
Pharmaceuticals and IT were two sectors that saw selling, with the BSE healthcare index closing 0.40 per cent down and the IT index losing 0.01 per cent. BSE’s advance-decline ratio favoured the bulls. As many as 1,619 BSE-listed stocks advanced against 1,091 declining, while 138 remained unchanged.