Policy actions boost sentiments

Mon, 28 Nov Closing

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The buying momentum continued unabated during the closing stages of the day and as a consequence, indices in the Indian stock markets closed the day strongly in the positive. Gains on the BSE-Sensex came in the region of 470 points (up 3%) while NSE-Nifty witnessed gains of the magnitude of 140 points. While BSE Mid Cap and BSE Small Cap indices witnessed lower gains, they were still up a decent 1.6% and 1.9% respectively. Only two stocks edged lower from amongst the Sensex stocks.

Buoyancy was seen across Asian indices as well. Europe too is trading in the positive currently. The rupee was trading at Rs 51.95 to the dollar at the time of writing.

Favourable developments in both the international as well as local markets helped markets shed its pessimism of the past few weeks and rise significantly today. While news of a new bailout package in Europe improved investor sentiment, the same also got a boost on account of Indian Government's decision of last week to open up the retail sector to FDI. The fact that investors resorted to short covering in Indian markets also added to the magnitude of gains. However, there is still no guarantee that this trend will continue but this should not bother long term investors as decent returns can be had from fundamentally strong Indian stocks for those willing to overlook near term factors.

Infrastructure financing major Infrastructure Development Finance Company (IDFC) is of the opinion that its most recent infrastructure bonds issue will fetch good retail investor participation from smaller towns. It believes that since financial awareness is rising, the interest of the salaried class in the capital markets has grown a great deal. The company is also of the view that since stock markets are quite volatile currently, investors will take greater interest in bonds than equities. IDFC bonds offer opened for subscription on November 21 and would close on December 16. The tax-saving bond comes with a coupon rate of 9 per cent with a lock-in period of 5 years for buy-back. The stock outperformed the broader market and closed higher by 7% today.

It is believed that one man's poison is another man's food and the movement of the Indian rupee against the dollar in recent times is perhaps the best example of this. Thus, while the record low of rupee against the dollar is making most sectors sweat, IT and textile are amongst the industries that seem to be rejoicing the most. This is because a lower rupee will directly translate into higher revenues for these companies without expending even an iota of extra effort. However, with quite a few companies resorting to hedging, the gains from such a move may not be 100%. It is still a welcome development at a time when organic growth is proving difficult to come by. Stocks from both the sectors thus closed higher on the bourses today.