Macro data revs up Sensex, Nifty

Mumbai: The equity markets soared higher on Friday as investor sentiments turned positive amidst reports that Prime Minister Narendra Modi would hold a meeting with senior finance ministry officials later in the day to discuss the current crisis in the rupee and other economic issues.

The Nifty surged 145.30 points or 1.28 per cent to end the day at 11,515.20 while the Sensex closed the sessions at 38,090.64, up 372.68 points or 0.99 per cent.

The rally in the domestic bourses was well supported by a strong recovery in the rupee against the dollar and easing of the 10-year government bond yields after retail inflation fell to a ten-month low of 3.69 per cent in August.

The rupee appreciated 0.65 per cent to close the session at 71.75 a dollar as compared to its Wednesday’s close of 72.19. The 10-year bond yield stood at 8.081 per cent, from its previous close of 8.13 per cent.

“The markets witnessed a positive momentum in last two trading days with easing global trade tensions, recovery in rupee and fall in crude prices. Though the markets cheered fall in inflation, the recent rupee depreciation along with higher oil prices have raised the possibility of rate hike by the Reserve Bank of India (RBI) in its October monetary policy meeting,” said Teena Virmani, vice-president, research at Kotak Securities.

An index of world stock markets climbed to its highest in over a week on Friday as expectations grew that the United States and China would start fresh trade talks, while an interest rate hike in Turkey supported the lira and emerging markets. The MSCI All-Country World index, which tracks shares in 47 countries, rose 0.24 per cent and touched its highest since September 4.

While global developments would keep the markets on edge, on the domestic front, Ms Virman said the meeting of PM with top government officials to take stock of economy struggling with twin deficits and deprecating currency will be important to watch out for.

According to the provisional data released by the stock exchanges, foreign portfolio investors (FPI) bought shares worth Rs 1,090.56 crore on Friday.

“This bounce back should not be taken as a beginning of a new rally because corrections seldom have such a short period. Markets will continue to trade in a whipsaw manner, which would be a nightmare for traders to take any view on stocks or market. Although global headwinds are slowly subsiding, the high valuations should deter investors from making fresh buys at the current levels,” said Jimeet Modi, CEO & founder of SAMCO Securities.