Indian stocks heave sigh of relief as England rubs bond balm on investors

The Indian stock market saw some relief after falling for six sessions as Sensex rose 502.93 points or 0.89 percent at 57,101.21 and the Nifty added 152.10 points or 0.90 percent at 17,010.70.

At 09:47 am, about 2,300 shares advanced, 493 shares declined, and 81 shares remain unchanged.

Stock markets around the world staged some recovery as England said it would step in to the bond market in an attempt to dampen investors' fears of contagion across the financial system.

In the Indian equity market, all sectoral indices are trading in the green led by metals which jumped over two percent followed by power, financials, FMCG, oil & gas and realty indices. The midcap and smallcap indices added over a percent each.

Here are the factors that are propelling markets higher:

Positive global cues

Global equities staged a partial comeback on Wednesday with Wall Street stocks surging around two percent as the Bank of England said it would step in to the bond market in an attempt to dampen investors' fears of contagion across the financial system. The Dow Jones Industrial Average jumped 548.75 points or 1.88 percent to 29,683.74. The S&P 500 gained 1.97 percent to 3,719.04. The Nasdaq Composite was 2.05 percent higher at 11,051.64 at the close.

Among Asian names, Hang Seng and Kospi added over a percent each while Nikkei and Shanghai are up half a percent each. SGX Nifty is up 0.54 percent or 91 points and is trading at 16,980.50.

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Bank of England buys bonds

Markets rose after Britain's central bank launched an emergency bond buying programme to stabilise a furious sell-off in gilts, though trade was skittish and sterling remained under pressure. The Bank of England said it will buy as much as £5 billion ($5.4 billion) a day of long-dated government bonds until October 14. It spent about a billion pounds on Wednesday and 30-year gilt yields fell 105 basis points, the biggest drop ever according to Refinitiv records stretching back to 1992.

Rupee recovers from record low

The rupee gained some ground in the morning session on September 29 to recover from a record low in the previous session, pausing a five-session losing streak after the British central bank intervened by starting an emergency bond-buying operation to stop a violent sell-off of UK assets. The dollar index dipped, treasury yields slipped significantly while US stocks recovered. The rupee gained 35 paise to 81.58 against the US dollar in early trade, compared to its previous close of 81.93, PTI reported.

Technical View

Deepak Jasani, Head of Retail Research, HDFC Securities

Asian equities jumped on Thursday following the strongest day for US stocks since early August after the Bank of England unveiled a bond-buying programme that triggered a global rally in government debt. Nifty fell for the sixth consecutive session on September 28 pulled down by weak global cues and a falling rupee.

Nifty continued its down move on Wednesday. However, a bounce in other markets could be mirrored by the Indian markets in the near term. On upmoves, 16,978 and later 17,038 could offer resistance. The 16,653-16,752 band could provide support for the near term.

(Agency inputs)