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Shares hold on gains for fifth straight session; Kotak Mahindra Bank shares offset impact of Moody's ratings cut

FP Staff
·5-min read

Shares held on to gains for a fifth straight session on Tuesday as advances in Kotak Mahindra Bank helped offset the impact of a ratings cut by Moody's, citing slow economic growth.

Sensex jumped over 300 points in early trade on Tuesday, led by index-heavyweights Kotak Mahindra Bank, HDFC, TCS and Reliance Industries amid positive cues from global markets.

After opening on a tepid note, the 30-share index was trading 309.68 points or 0.93 percent higher at 3,613.20.The Nifty was up 0.98 percent at 9,922.85 by 0405 GMT, while the Sensex rose 1.01 percent to 33,638.43. The indexes rose over 2 percent on Monday.

Manish Hathiramani, Index Trader and Technical Analyst, Deen Dayal Investments, said, "The markets have resumed their uptrend trajectory for the day. We need to keep above the levels of 9900 for the markets to remain positive and climb to higher levels. The support for the day is at 9750. We can enter this trend on every dip for a target of 10,050," he said.

Kotak Mahindra Bank was the top gainer in the Sensex pack, rising around 7 percent, followed by M&M, Sun Pharma, Hero MotoCorp, Bajaj Finance, Tata Steel, Bharti Airtel and HCL Tech.

On the other hand, L&T, ITC, ICICI Bank and SBI were among the laggards.In the previous session, the BSE barometer settled 879.42 points or 2.57 per cent higher at 33,303.52 and the broader Nifty surged 245.85 points or 2.57 per cent to finish at 9,826.15.

On a net basis, foreign portfolio investors bought equities worth Rs 1,575.46 crore in the capital market on Monday, provisional exchange data showed.

Moody's Investors Service downgraded India's credit rating to a notch above junk on Monday to 'Baa3' from 'Baa2', citing a prolonged period of slow growth in Asia's third-largest economy, rising debt and persistent stress in parts of the financial system.

The downgrade follows data last week that showed economy grew 3.1 percent in January-March period, its slowest quarterly pace in at least eight years.

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"Even though it is a downgrade, the rating is still in investment grade. This is on par with the rating of S&P and Fitch. This is unlikely to impact the market materially since the strength of the market is largely due to the humongous liquidity floating in the global financial system, said VK Vijayakumar, Chief Investment Strategist, Geojit Financial, to PTI.

Meanwhile, Asian stocks eked out gains on Tuesday as investors' focus on the prospects of a global coronavirus recovery won out over familiar worries about Sino-U.S. relations and the depth of economic damage.

On the global front, bourses in Hong Kong, Tokyo and Seoul were trading with significant gains, while those in Shanghai slipped in the red.

Exchanges on Wall Street ended on a positive note in overnight trade. International oil benchmark Brent crude futures were trading 0.81 per cent higher at $38.63 per barrel.

Rupee slips 6 paise to 75.60 against dollar in early trade

The rupee depreciated 6 paise to 75.60 against the US dollar in opening trade on Tuesday as strengthening American currency and sustained rise in crude oil prices weighed on investor sentiment even as domestic equities opened on a positive note.

Forex traders said, while firm start of the equity market and foreign fund inflows supported the rupee, factors like strong dollar, US-China tensions and Moody''s downgrade of India''s sovereign credit rating dragged down the local unit.

The rupee opened weak at 75.57 at the interbank forex market and then fell further to 75.60, down 6 paise over its last close.

It had settled at 75.54 against the US dollar on Monday.

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"Risk appetite soured this morning as US President Donald Trump vowed to use force to end violent protests in American cities," Reliance Securities said in a research note, adding that Moody's downgrade and further downgrade expectation from other rating agencies could keep appreciation limited, to PTI.

Meanwhile, US President Donald Trump has threatened that he would deploy the military if the states fail to take necessary actions to quell the violent protests that have spread across the country over the custodial killing of African-American George Floyd.

Investors are also concerned about rising coronavirus cases and its impact on the global as well as domestic economy.

In India, the death toll due to COVID-19 rose to 5,598 and the number of the number of infections rose to 1,98,706, according to the health ministry.

The number of cases around the world linked to the disease has crossed 62.66 lakh and the death toll has topped 3.75 lakh.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.03 per cent to 97.86.

Also See: Financial stocks zoom: Sensex rallies over 900 points, Nifty surges to 9,823-level; ICICI Bank, RIL, HDFC among top gainers

Sensex jumps over 200 points, NSE above 9,390-level in opening trade; RIL, ICICI Bank, HDFC among early gainers

Markets open weak: Sensex drops over 300 points, Nifty tests 9,400-level in early trade ahead of GDP data; Rupee up

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