Indian stocks are in the midst of a strong pullback rally, after falling sharply on Friday. The benchmark indices regained key technical levels on the back of nearly 4 per cent jump.
At 1452 hours, the Sensex was trading 585 points higher at 16,433.91 and the Nifty advanced 179 points to 4,926. On Friday, the Sensex had closed below the 16,000 mark while the Nifty had breached the 2008 lows of 4,776 indicating extreme bearish sentiments.
Commenting on the rebound, Ashish Chaturmohta, Vice President at IIFL Wealth said it is premature to say if a base has formed or not. "It is more of a pullback rally which can end at 5,050-5,100 levels... Crossing 5,000 levels would not be easy in the short term," he added.
Other analysts were skeptical too. Saurabh Mukherjea, Head of Equities at Ambit Capital said, “Plenty of downside is left in the Indian markets because our economic fundamentals have weakened in the last year and half... The Sensex will probably move towards 14,500 by the year end."
IT stocks jumped 5 per cent. Among other big gainers, banking, metal, realty and captial goods stocks rose over 4 per cent. Barring ONGC, 29 of the 30 Sensex stocks were in the green. JSPL rose 8 per cent while TCS advanced 7 per cent. Jaiprakash Associates, Tata Steel and Bajaj Auto advanced over 5 per cent.
Reliance Industries and Infosys were trading with 4-5 per cent gains. The two stocks together added 135 index points to the Sensex. Another heavyweight SBI advanced 3 per cent. Over 90 per cent stocks rose on the BSE 500 index suggesting a broad based rally.
Most Asian markets closed with big gains on the back of the rally on Wall Street last Friday that sent the Dow higher by over 1 per cent to 11,284.54. While the Fed did not announce a new round of quantitative easing, Ben Bernanke left a window open for further economic stimulus in the event of a recession
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