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Sensex soars 500 points as US job market shows signs of recovery

Abhishek Parashar | Updated on: 11 July 2016, 22:33 IST

With the news of a strong recovery emanating from the US job market, Indian markets opened this week with a bullish trend. The Bombay Stock Exchange (BSE) Sensex jumped 231.33 points to open at 27,358.

Similarly, the Delhi-based National Stock Exchange (NSE) NIFTY opened at 8413.35 with a gain of 90.15 points. The NIFTY has touched 8,400 mark for the first time after August 2015.

The Sensex was hovering around the 27,626.69 mark at the close of trading on Monday - a net gain of 486 points. NIFTY was stable at 8,462, a rise of 139 points. It closed at 8467.90. As many as 49 shares listed with NSE have entered the green zone while two shares are in the red zone.

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Several prominent shares listed in BSE, including Tata Motors, Adani Ports, ICICI Bank, Coal India, Maruti and NTPC have shown an upward trend of 3-5%. The buying spree on the part of investors has ensured all other indices have also touched the green mark.

Almost all the big Asian markets are following the same trend. The Japanese Nikkei index was soaring at a 3.5% high. Hong Kong's blue-chip Hang Seng Index and the Shanghai Composite Index were trading with a rise of approximately 1%.

Employment and the market

The global stocks have risen owing to a report released by the US Bureau of Labour Statistics that claims 2,87,000 new jobs were created in the US markets last month. This is being seen as a sign of resurgence in the US economy.

Although the same report does state that the unemployment rate in the US has grown to 4.9%. But a sharp increase in last month's employment statistics has raised the hopes of market analysts.

The employment data for May had proved to be a dampener for global markets. This had resulted in the decline of dollar and the Federal Reserve Bank was forced to postpone the decision of hike in the interest rates.

On Friday, the S&P Stock Index closed at a record high. On Monday, the Dow Jones Industrial at the time of writing this copy was 18,275.3. Similarly, NASDAQ Composite jumped by 1.5% to close at 4953.33.

Surge in the sales of vehicles

Besides stimulus from US economy, the rise in Indian markets can also be attributed to a variety of domestic reasons.

According to the data released by the Society of Indian Automobile Manufacturers (SIAM), the sale of two-wheelers grew by 12.3% in June while the sales in the commercial vehicle market soared by 5.6%. Several reports suggest a total of 223,454 passenger vehicles were sold in June. This is 2.7% higher than the figures in May.

But at the same time, the sales of cars dropped by 5.18% during the same period. The SIAM data suggest only 1,54,237 cars were sold in June as against 1,62,655 cars in May.

The BSE Auto Index had touched the 27,589 mark at the time of filing this report. It is an increase of 460 points. The Tata Motors shares have strengthened by 4%. The stocks of Maruti, Hero Moto corp, Bausch, Bajaj Auto, Mahindra & Mahindra have grown within a range of 1.04 to 2.69%.

The S&P BSE Metal Index has moved upwards by 2% whereas the Realty Index has surged by 2.09%. The main beneficiaries of the rise in Realty stocks are NBCC, Godrej Properties and Oberoi Realties. Likewise, Jindal Steel, Coal India, Vedanta and Tata Steel have emerged as biggest gainers of an increase in the metal index.

Positive domestic signals

The direct tax data released by the government on Friday has also propelled the markets. The collection of direct taxes during the first fiscal quarter was recorded at Rs 1.24 lakh crore, 24.8% more than the figure for the same period last year.

The collection of indirect taxes has also risen by 30.8% in the first fiscal quarter as compared to the same period last year. The government managed to collect Rs 1.99 lakh crore as indirect taxes during the first fiscal quarter.

The RBI data for the week ending on 1 July suggests that India's foreign exchange reserve has also increased by $ 2.374 billion to reach $ 363.171 billion. The foreign exchange reserved had decreased by $ 3.028 billion during the last week.

A strong rupee

The rupee opened at 67.39 against the dollar on Monday, an increase 27 paise as compared to the last week. This led to the selling of dollar by exporters and banks.

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First published: 11 July 2016, 22:33 IST
Abhishek Parashar @abhishekiimc

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