RIL’s decision to buy out a number of Future Group companies has lifted a sword that was hanging over the Indian banking system, as a collapse of those companies could have meant addition to the NPA pile.
Meanwhile, an upbeat global market mood added to the euphoria back home.
The Mukesh Ambani-led company said it will acquire Future Retail that owns the BigBazaar which sells everything from groceries to cosmetics and apparel, and Future Lifestyle Fashions that operates fashion discount chain Brand Factory.
Not surprisingly, bank stocks were at the forefront of the rally, as they pushed BSE Sensex to 39,912, up 444.76 points or 1.13 per cent as of 09.24 am. NSE benchmark Nifty added 138 points or 1.18 per cent to 11,785.60. Financial services and IT names also gained but media and pharma stocks were under pressure.
“We have opened with a bang and have achieved the target of 11,750. If we are able to close above the levels of 11,800, we could see the Nifty at 12,000 during the course of the September series itself. 11,500 is the new upgraded support for the week. Until we do not break this level on a closing basis, traders can initiate long positions on every dip for a target of 11,800 and then 12,000,” said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
Future Group stocks were among the biggest gainers on exchanges. Future Market Networks, Future Supply Chain Solutions, Future Enterprises and Future Consumer rose 5 per cent each, and Future Retail 16 per cent.
In the 30-share pack Sensex, IndusInd Bank was the biggest gainer, up 3.05 per cent at Rs 676.60. It was followed by HDFC Bank, ONGC, Axis Bank, Tech Mahindra and ITC that gained in the range of 1-3 per cent.
Bharti Airtel was the biggest loser, down 1.05 per cent to Rs 518.05. Sun Pharma and Bajaj Auto were among other top losers in the pack, falling marginally.
Broader market indices were mixed with Nifty Smallcap witnessing profit booking for the second day as it shed 0.35 per cent while Nifty Midcap continued its ascent and rose 0.11 per cent. Broadest index on NSE, Nifty 500 was up 0.56 per cent.
Nifty Private Bank was the biggest sectoral gainer on NSE, rising 1.62 per cent. It was followed by Nifty PSU Bank, Nifty Bank and Nifty Financial Service with gains in the range of 1-2 per cent. Nifty Media was trading with a cut of 1.32 per cent.
Globally, Asian shares notched a 29-month high as investors wagered monetary and fiscal policies globally would stay super stimulatory, while an upbeat reading on China’s service sector augured well for continued recovery there.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5 per cent to reach its highest since March 2018, extending a 2.8 per cent gain last week.
Chinese blue chips firmed 0.7 per cent to reach levels not seen since mid-2015. Surveys showed Chinese manufacturing activity edged back a tick to 51.0 in July, but services jumping a full point to 55.2 in a hopeful sign of reviving consumer demand.
E-Mini futures for the S&P 500 climbed another 0.5 per cent, while EUROSTOXX 50 futures added 1 per cent.
Tokyo’s Nikkei rallied 1.9 per cent aided by news Warren Buffett’s Berkshire Hathaway had bought more than 5 per cent stakes in each of the five leading Japanese trading companies.