Sensex snaps 3-day losing streak, gains 1%

Reform hopes, IMF forecast boost sentiment

The stock market ended its three-day losing streak on Thursday, during which it corrected nearly three per cent. The benchmark Sensex gained a per cent on hopes that the insurance Bill would be passed by Parliament. Markets were also upbeat after the International Monetary Fund raised growth estimates to 7.2 per cent on Wednesday, signalling confidence in Indian economic recovery.

On Thursday, the BSE Sensex closed up 271 points, or about one  per cent, at 28,930, while the National Stock Exchange (NSE) Nifty closed at 8,776, up one per cent. Power, metal and cement companies led the gains.

“The markets were in the over-sold zone, with some of the large-cap looking very expensive. So, some amount of short-covering was expected. The mood was also elevated by the rate cut announced by South Korea,” said Alex Mathews, head of research, Geojit BNP Paribas Financial Services.

In the past three trading sessions, the Sensex and Nifty had shed three per cent triggered by worries about the US Federal Reserve’s first rate rise in a decade even as the US jobs data showed improvement.

Positive news on the domestic front, however, continue to shield the market from sharp correction.

“The market was up mainly because of stable global cues and on the expectations of positive news flow on Insurance Bill, which the government has introduced in the Rajya Sabha to approve,” said Shrikant Chouhan, head of technical research at Kotak Securities.

Tabling of the insurance Bill, which increased the foreign investor investment cap, fuelled optimism that other stalled projects and reform measures could also see some action.

“This is encouraging for foreign investors who are hoping to see more on-ground action from the Indian government,” said Mathews.

On Thursday, foreign portfolio investors were net buyers of Indian equities at Rs 733 crore. However, domestic institutional investors remained net sellers at Rs 381 crore.

Several insurance-related stocks like Reliance Capital, Max India and Exide Industries saw sharp gains on Thursday. Sesa Sterlite, NTPC, Hindalco, SunPharma and Tata Motors were the top five performing stocks in the Sensex.