RBI Liquidity Infusion Impact: After the initial weakness in the Indian stock market on Wednesday, the bulls have made a great comeback. Despite opening in the red, Sensex and Nifty are trading in the green after recovering from lower levels. Mixed signals from global markets and strong US GDP data have boosted the morale of investors. At the same time, on the domestic front, the big announcement made by the Reserve Bank of India (RBI) regarding liquidity has supported the market.
Market condition, rebound after initial decline
The stock market had a dull start on Wednesday, with the Sensex falling by more than 100 points. However, buying returned within a short time and the Sensex gained 130 points and reached near 85,654. At the same time, Nifty also went above the important level of 26,200 with a rise of 40 points. Realty, private bank and consumer durables indices witnessed maximum strength, while IT and pharma stocks remained under mild pressure.
Global signals, US GDP surprised
The third quarter growth rate (GDP) of the US economy was better than expected at 4.3%, which is the fastest in the last two years. Due to this strength, the dollar index has slipped to a two and a half month low of 97.5. Its positive impact is on emerging markets. US markets rose for the fourth consecutive day and the S&P 500 closed at a record high.
RBI’s cash announcement of Rs 2 lakh crore
The biggest ‘booster’to the market Has come from RBI. The Reserve Bank has decided to inject cash worth about Rs 2 lakh crore into the system. Government bonds will be purchased through OMO auction starting from December 29. Due to this news, the movement in banking shares has intensified. Along with this, stocks like Canara Bank, PNB and Union Bank are being included in BSE Bankex from today, due to which the volume in these stocks is expected to increase.
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FII and DII action
Foreign institutional investors (FIIs) may have sold about Rs 1800 crore in the cash market, but they remain buyers in the derivatives segment. On the other hand, domestic institutional investors (DIIs), maintaining their record, bought for the 82nd consecutive day and injected around Rs 3800 crore into the market. This continuous buying of domestic funds is acting as a strong protective shield for the Indian market.
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