Markets snap three-day losing streak on liquidity boost; Nifty closes above 11,000

Equity benchmarks snapped their three-day losing streak on Monday as the RBI announced measures to shore up liquidity amid the government pressing for a change of management at the crisis-hit IL&FS.

The 30-share BSE Sensex soared 299 points in see-saw trade to close at 36,526.14, while the NSE Nifty jumped 77.85 points to reclaim the 11,000-mark.

Positive manufacturing PMI data for September and healthy auto sales numbers also reassured investors, brokers said.

Yes Bank was the top gainer in the Sensex pack, spurting 9.86 per cent, after the mid-sized lender said it is fully geared up to find a successor for its MD and CEO Rana Kapoor, whose tenure was curtailed by the RBI last month.

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Shares of IL&FS group companies surged up to 20 per cent Monday after the government moved the National Company Law Tribunal (NCLT) for change of management at the crisis-hit firm.

The NCLT allowed the government’s plea to reconstitute the board of Infrastructure Leasing & Financial Services Ltd (IL&FS) after market hours on Monday.

The six members of the new board are—Uday Kotak of the Kotak Mahindra Bank, retired IAS officer Vineet Nayyar, former Sebi chairperson G N Bajpai, ICICI’s non-executive chairperson G C Chaturvedi, IAS officer Malini Shankar and senior bureaucrat from CAG Nand Kishore.

Debt defaults by certain group entities of diversified IL&FS have triggered fears of liquidity crisis in the financial markets and the RBI has been taking steps to improve the overall cash situation.

The Reserve Bank Monday announced that it will inject Rs 36,000 crore liquidity into the system through purchase of government bonds in October to meet the festival season demand for funds.

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The Sensex opened on a strong note at 36,274.25 but soon declined due to concerns surrounding the NBFC space and the commercial paper market. However, it recovered in afternoon trade to touch a high of 36,616.64, before finally closing higher by 299.00 points, or 0.83 per cent, at 36,526.14.

The NSE Nifty gained 77.85 points, or 0.71 per cent, to finish at 11,008.30. Intra-day, it shuttled between 10,821.55 and 11,035.65.

Meanwhile, foreign institutional investors (FIIs) net sold shares worth Rs 1,699.94 crore Friday, while domestic institutional investors (DIIs) bought equities to the tune of Rs 3,256.34 crore, as per provisional data.

“Market rebounded after a weak start with short covering in banking stocks after recent correction and a positive global market. The new trade deal between US and Canada eased trade war concerns and will stimulate sentiment,” said Vinod Nair, Head of Research, Geojit Financial Services Ltd.

Other major index gainers included TCS, HDFC, State Bank of India, ICICI Bank, Tata Motors, Infosys, Hindustan Unilever, Coal India, Wipro and Bajaj Auto.

In contrast, Bharti Airtel, Axis Bank, IndusInd Bank, Reliance Industries, Kotak Mahindra Bank, Larsen & Toubro, M&M and Asian Paints settled with losses of up to 3.67 per cent.

Meanwhile, the BSE small-cap index fell 0.25 per cent while the mid-cap gauge gained 0.53 per cent.

The country’s manufacturing sector activity improved in September amid gains in new orders, output and employment, a monthly survey said on Monday.

The Nikkei India Manufacturing Purchasing Managers’ Index strengthened slightly in September to 52.2, up from 51.7 in August, as sales rose from both domestic as well as foreign clients.

Auto stocks rose after companies posted healthy sales numbers for September.

Bajaj Auto reported a 17 per cent increase in total sales in September, while Hinduja Group flagship Ashok Leyland reported a 26 per cent rise.

Other major auto players that posted a rise in September sales included utility vehicles major Mahindra & Mahindra (M&M), Tata Motors and Royal Enfield, the two-wheeler division of Eicher Motors.

The country’s largest car maker Maruti Suzuki India (MSI), however, reported a marginal decline.

In other Asian markets, Japan’s Nikkei gained 0.52 per cent, Hong Kong’s Hang Seng rose 0.26 per cent and Shanghai Composite Index climbed 1.06 per cent.

In Europe, Frankfurt’s DAX rose 0.60 per cent and Paris CAC 40 was up 0.33 per cent in early deals. London’s FTSE 100 too inched up 0.01 per cent.