MUMBAI: The Reserve Bank of India’s (RBI’s) measures to ease the liquidity in the banking system by infusing around Rs 1.5 lakh crore led to a relief rally on Tuesday. Leading banking stocks like HDFC Bank, ICICI Bank and Axis Bank were the top gainers, contributing almost 90% to the Sensex’s gains. At the same time, after falling by 6 basis points intra-day, bond yields were flat at the end of the trading session.
Both the Sensex and Nifty gained almost 1.5% in the morning trade. However, profit-booking in the last hour saw the indices pare gains significantly. The Sensex closed at 75,901.41, up 535.24 points or 0.71%, while the Nifty closed below 23,000 again at 22,957.25, up 0.56%.
Foreign portfolio investors (FPIs) continued their selling spree, with net sales of Rs 4,921 crore. Domestic institutional investors bought shares of Rs 6,814 crore, according to provisional figures from exchanges.
FPIs have sold shares worth Rs 71,106 crore ($8.2 billion) in January – the highest in the past three months. DIIs have purchased shares worth Rs 80,401 crore. The Sensex and Nifty are down around 3% during this period while broader indices – the mid-cap and small-cap – are down 11% and 14%, respectively.
A similar trend was seen on Tuesday as well. While the benchmark indices rose, broader indices continued to bleed. The BSE Midcap index fell 0.61%, while the BSE Smallcap index declined 1.77%. During intraday trade, both indices had fallen by approximately 2% and 4%, respectively.
Banking emerged as the top-performing sector, with the BSE Bankex rising 1.49%, followed by financial services (up 1.45%) and realty (up 1.27%). On the other hand, pharma and healthcare were the biggest laggards, declining over 2% each.
HDFC Bank was the largest contributor to the Sensex’s 535-point gain, accounting for 266 points or 50%. ICICI Bank and Axis Bank together added another 204 points or 38% of the gains.
Despite the positive close for the benchmark indices, overall market sentiment remained negative. There were 2,666 losers compared to 1,308 gainers. The total market capitalisation on the BSE declined by Rs 1.3 lakh crore, settling at Rs 409 lakh crore.
At the same time, the yield on government bonds fell by 6 basis points to 6.63% during the session before ending flat compared to its previous close. On Tuesday, the yield on the 10-year benchmark 6.79% 2034 bond closed at 6.68%, unchanged from Monday.
“During the day, traders booked profits, which pushed yields higher. However, market sentiment remains positive, with expectations for the February rate cut already being factored in,” said a trader with a private bank.
Market participants noted that during the session, some large private banks, mutual funds and state-owned banks sold government bonds at a profit. Data from the Clearing Corporation of India revealed that mutual funds were not major sellers on Monday.
Source: The Financial Express
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