Some very strong reasons for fierce snap back of Indian equity markets are listed below:-
- Union Finance Minister, Pranab Mukherjee came out strongly to assert that he is not contemplating withdrawal of stimulus package as of now. This dispelled a big fear out of the minds of investors.
- Deputy Chairman of Planning Commission, Montek Singh Ahluwalia reassured that India was ready to absorb the surge in foreign investment flows and in fact welcomed the same. In other words, sharp surge in foreign investments into India will not meet entry barriers as was the case in past. This was seen by FIIs as a paradigm shift from hawkish stance of India in dealing with excessive foreign investments. And this was given a thumbs up by market.
- With Justice Raveendran of Supreme Court recusing himself from three-judge bench hearing a high profile legal battle between billionaire Ambani brothers, the stage was set for much delayed verdict in the case. Justice Raveendran cited potential conflict of interest before withdrawing from the bench. This means a new bench has to be constituted and hearing has to begin from the very beginning. Reliance Industries benefits from the case becoming a long drawn affair. This news was cheered by traders who bought Reliance Industries with gay abandon and the scrip rose 5.2% in today's trade. Can the broader market then stay away from exhibiting bullish sentiments? The answer is an obvious 'No'.
- Finance Minister, Pranab Mukherjee reiterated that there will be many more disinvestments in state owned firms. “We are aiming at stake sales in public-sector undertakings (PSUs) that have less than 10% public holding,” he said. “A few more PSUs have been identified for disinvestment.” Those words sounded very sweet to the ears of traders and they demonstrated their joy by going on a buying spree.
Besides all that we discussed above, there were technical reasons for the bounce in Indian markets. Those scrips which got the maximum drubbing in trade yesterday rebounded back today by almost the same percentage. But volume in today's trade was nothing to write home about. That means there were aggressive shorts created yesterday, and with general bullish sentiments prevailing today in global markets, the shorts were progressively covered up. And of course there was Institutional buying across the board. Hope the same continues into next few trading sessions also. Happy trading!!
