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ECB signal brings temporary cheer

Indian equities rose on Friday in volatile trade after the European Central Bank signalled its resolve to tackle the debt crisis in euro zone.

Indian equities rose on Friday in volatile trade after the European Central Bank (ECB) signalled its resolve to tackle the debt crisis in euro zone. The positive global sentiment lifted Asian markets as well. The benchmark index Sensex, however, ended the week in the red.

On Friday, the BSE Sensex rose 199 points, or 1.20%, to close at 16,839, while the broader 50-share NSE Nifty was up 56 points, or 1.13%, at 5,099. Asian and European stocks rose as ECB president Mario Draghi said policymakers will do whatever it takes to preserve the euro.

On Friday, foreign institutional investors (FIIs) bought shares worth R563 crore, while domestic institutional investors sold shares worth R254 crore on Friday, provisional BSE data show. FIIs have bought shares worth about $1.58 billion in July, taking the year-to-date purchases to a little over $10 billion. In the year to date, the benchmark BSE Sensex is up about 9%.

It was a dismal week for the benchmark indices, with the Sensex slipping 1.86%. Shares of mid-cap and small-cap firms plunged between 5% and 30% on Thursday on talks of financiers selling off large quantities of pledged shares.

The weak monsoon also weighed on Indian equities during the week. ?Continuing concerns on monsoons and lack of policy reform announcements had a negative impact on sentiments,? said Dipen Shah, head – private client group research, Kotak Securities. Last week, the India Meteorological Department had said the monsoon was 22% below a 50-year average since June 1.

Among its peers, most key indices in Asia Pacific ended in the green on Friday. The Nikkei 225, Jakarta Composite and the Hang Seng rose handsomely by 1.46%, 1.98% and 2.02%, respectively. The Kospi index rose the most at 2.62%. The Straits Times bucked the trend and declined 0.20%.

All three major European indices were trading in the green on Friday. The DAX and FTSE 100 were marginally in the green, while the CAC was trading higher by 0.5%. The Dow Futures was up 47 points at 12,872 at 4.40 pm IST. Brent crude oil prices were ruling higher by $0.58 at $105.89 per barrel. European stocks rose for a second day following a report that the ECB is preparing to buy Spanish and Italian debt.

Back home, 24 of the 30 Sensex stocks advanced on Friday. In the broader market, breadth was weak with 1,703 stocks traded on the BSE ending lower compared with 1,060 advances. Most of the 13 BSE sectoral indices ended in the green. The FMCG, IT and Teck indices rose by more than 1% each. The metal index rose the most at 2.09%. The realty index declined the most at 0.79%.

The market is now awaiting the RBI?s mid-quarterly monetary policy review on July 31. With the Presidential elections over, the market is also hoping that the government will initiate fresh reforms soon. Market participants will also keep an eye on the progress of the monsoon next week.

The NSE cash turnover on Friday was at R10,673 crore, while the six-monthly daily average is about R11,000 crore. Turnover in derivatives was about R1.06 lakh crore and the daily average for the past six months is R1.26 lakh crore.

India VIX, a volatility index based on the S&P CNX Nifty index option prices, rose 0.42% on Friday to 16.44. VIX is a measure of the market’s expectation of volatility over the near term and, in general, increases when the market is bearish and decreases when the market is bullish.

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First published on: 28-07-2012 at 00:03 IST
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