Benchmark indices rose for the second day, gaining more than 1% on Monday, as euro-zone leaders emerged from-all night talks in Brussels with a deal to keep Greece afloat and part of the euro currency union.
Greek lawmakers have until Wednesday to pass key creditor demands, including streamlining value-added taxes, broadening the tax base and curbing pension costs. The Sensex rose 299.79 points, or 1.08%, to close at 27,961.19. The Nifty gained 99.10, or 1.2%, to settle at 8,459.65. Gains in broader markets surpassed those in front line stocks with BSE Mid- and Small-Cap indices rising in the range of 1.3-1.5%.
Major Asian indices ended positive, reacting to the Greece deal as well as a rally in Chinese shares as more companies resumed trading on Monday.
The Shanghai Composite index rallied 2.4%, extending its three-day gain to 13%, following unprecedented government interventions to end a rout that wiped out almost $4 trillion of value from the country’s equities. The number of halted companies fell by 408 from Friday to 1,045, or 36% of overall listings on mainland exchanges. The Hang Seng index of mainland stocks listed in Hong Kong climbed 1.2%.
Japan’s Nikkei 225, South Korea’s Kospi, Singapore’s FTSE Straits Times and Taiwan’s Taiex all ended up 1.-1.5% each on Monday. Major European indices were trading up 1.5-2% each, while US stock futures were up nearly 1%.
Back home, gains were led by foreign institutional buying in the cash segment. According to provisional data from stock exchanges, foreign portfolio investors (FPIs) net bought $83.13 million (Rs 527.98 crore) of shares in the cash segment. Their domestic counterparts net sold R171.55 crore of equities on Monday, data showed.
India VIX, a measure of market’s expectation of volatility over the near term, decline the most in a week as stocks rallied after the Greece deal. The India VIX Index lost 4.7% to 16.27 at the close in Mumbai after climbing as much as 3.8%.
“Traders are unwinding speculative positions as some uncertainties regarding Greece seem to be decreasing. Buying puts at these levels may be a good strategy as premiums have fallen,” Sanjiv Bhasin, EVP, IIFL was quoted as saying in a Bloomberg report.
Barring capital goods, all sectoral indices ended positive. Technology and pharmaceutical shares were top gainers. The positive run for pharma shares continued as companies are seen benefiting from the pick-up in US FDA approvals, analysts noted. The BSE Healthcare index has given nearly 11% returns in the last one month.
Credit Suisse, in its investor note, stated that approvals for Indian players have picked up in the last three months even as the proportion of total approvals going to Indian firms has fallen due to outstanding 483s at several companies.
“Increase in approvals shows some benefit of GDUFA has started showing up. The real benefit is yet to be realised as FDA has so far utilised only 55% of GDUFA funds raised over last two years,” Credit Suisse stated.
Only two of the 30 Sensex companies featured on the losing side. ONGC declined a little over 1% while Larsen & Toubro fell 0.75%, dragging the gauge of capital goods companies marginally weak.
(With agency inputs)
