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Benchmark indices continue to trade firm in the noon trades after the European Central Bank (ECB) announced larger-than-expected measures to stimulate the region’s sagging economy. A smart rally in the frontline stocks including HDFC twins, Tata Motors and L&T is pulling the 30-share Sensex higher by nearly 150 points.
At 1 PM, the 30-share Sensex is up 213 points at 29,219 and the 50-share Nifty has gained 52 points at 8,813.
ECB has committed to purchase government bonds of Euro Zone countries worth 60 billion Euros ($69 billion) a month from March this year to September, 2016. With commodity markets remaining soft and uncertain, it is likely the money will flow into equity markets with strong upsides, such as India.
Market expectation was that Draghi would announce a euro 50 billion per month QE program which would run for a year totalling between euro 600-700 billion.
Meanwhile, foreign institutional investors were net buyers in Indian equities worth Rs 593 crore on Thursday, as per provisional stock exchange data
Asian markets are trading higher boosted by the ECB move and the rebound in crude oil prices after Saudi Arabia announced that King Abdullah had died and his successor, Salman, moved quickly to name his own heir to rule the world's biggest oil exporter. Nikkei has gained around 0.8%, Hang Seng index is up 0.9% and Shanghai Composite index has gained around 0.6%
Key Stocks:
On the sectoral front, 10 out of 12 sectoral indices are trading firm with BSE Capital Goods index is leading the rally and is up by 1% followed by BSE Auto, Power and Realty indices trading higher by upto 1%. However, BSE Consumer Durables and IT indices are losing sheen and are down by nearly 0.4%.
Rate sensitive stocks are surging in today’s trade. In the auto pack, M&M has gained over 3%, Tata Motors has gained around 2.5%, Hero Motocorp has climbed 0.6%. Maruti Suzuki has gained nearly 0.5%. A global investment banking firm raises Maruti Suziki price target to 4,276 rupees from 4,083 rupees.
On Thursday Tata Motors launched the Bolt, a hatchback, starting at Rs 4.64 lakh (ex-showroom, Mumbai). The company is pitting this car against segment leaders Maruti Suzuki Swift and Hyundai Grand i10.
Financials are trading firm across the exchange. HDFC twins have gained around 2% each, SBI is up 0.9%, ICICI Bank is up 0.2%.
Sesa Sterlite has gained over 2.2%. Yesterday, the company announced that its subsidiary Bharat Aluminium Company Limited (BALCO) has received approval of Consent to Operate (CTO) from the Chattisgarh State Pollution Control Board and other clearances for starting its Korba’s based 1200 MW Power Plant.
Dr Reddys Lab is trading flat with a positive bias. US-based biotechnology company Curis, Inc has entered into an exclusive collaboration agreement with Aurigene Discovery Technologies, an independent wholly-owned subsidiary of Dr Reddy’s Laboratories focusing on development of select cancer therapies.
An appreciating rupee has casted its shadow on the IT pack. IT stocks are under pressure as firmed up following the launch of quantitative easing programme by ECB. Infosys and TCS have declined 0.8% and 0.6% each while Wipro is trading flat.
In the broader market, both the BSE Midcap and Smallcap indices are under performing the large counter parts with losses of 0.2% and 0.6% each.
Market breadth on the BSE is negative with 1,680 declines against 1,002 advances.
