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Indian equities gained on Thursday, snapping three consecutive days of losses, as a stock market holiday in China brought calm to global markets.
The Shanghai and Hong Kong stock markets were closed on Thursday, and will re-open on Monday, as China commemorates the 70th anniversary of the end of World War II.
The global risk-off sentiment has spurred sustained foreign outflows from the Indian market. Foreign institutional investors (FIIs) have sold shares worth around Rs 19,000 crore in the past 11 sessions, excluding Wednesday's and Thursday's. FIIs sold shares worth nearly Rs 400 crore on Thursday, provisional data showed. In August, foreign investors pulled out Rs 17,000 crore from the Indian market.
"Supportive global cues and bargain hunting from participants helped benchmarks inch higher. Though the re-bound was witnessed across the board, the rate-sensitive pack majorly remained on traders' radar, on hopes of further rate cut from the Indian central bank in the coming policy review," said Jayant Manglik, president, retail distribution, Religare Securities.
On Thursday, the services data, as measured by the Nikkei/Markit Services Purchasing Managers' Index, grew for a second month in August. The index rose to 51.8 in August from 50.8 in July. A level above 50 shows an expansion.
All Asian indices ended in positive territory on Thursday. Straits Times and Jakarta Composite rose the most at 0.98 per cent and 0.72 per cent, respectively. European indices - FTSE 100, DAX, and CAC 40 - were trading in the positive territory, up between 1.1 per cent and 1.5 per cent at 5.45 pm India time, ahead of the meeting of the European Central Bank.
In India, the market breadth was strong, with 1,719 advances, compared with 969 declines on Thursday. Twenty seven out of 30 Sensex companies ended in positive territory. All of the 12 BSE sectoral indices ended positively, with the realty index gaining more than 4.5 per cent.
It has been a turbulent week for Indian equities, with the market slipping lower on three consecutive days. Weaker-than-expected gross domestic product (GDP) growth data for the quarter ended June, along with a slower pace of the core sector and factory growth, have raised worries about a pickup in the economy.
India's GDP growth slowed to seven per cent in the quarter ended June, from 7.5 per cent in the previous quarter, data released by the government after the market close on Monday showed.
Experts said the government would have to push ahead with its reform agenda, to spur growth and revive investor confidence, to ensure India withstands the global turbulence, triggered by fears over a China slowdown and an interest-rate increase by the US central bank.
Analysts have started downgrading Indian markets due to a delay in earnings' recovery. In the past few days, Macquarie, Barclays, and Ambit have lowered their targets for the Indian markets, citing weak earnings growth.
The Sensex has retreated about six per cent this year, and trades at 14.6 times its projected 12-month earnings, compared with 10.5 times for the MSCI Emerging Markets Index, according to Bloomberg.
