InvestorQ : Why did the Nifty show a sharp rebound on Tuesday although most of the global markets were weak?
prachi Patwardhan made post

Why did the Nifty show a sharp rebound on Tuesday although most of the global markets were weak?

Answer
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1 year ago


Despite a cautious start, the Nifty and Sensex closed extremely strong. There were several reasons we can attribute for the same.

· The markets were enthusiastic ahead of the monetary policy announcement on August 07 and hopes of a rate cut kept most of the rate sensitive sectors like banking, realty and automobiles in the positive territory.

· There was also an upgrade of the Indian equity markets by Credit Suisse First Boston (CSFB) which also changed the sentiments of the investors in the market from cautious to positive.

· China also came under pressure and put curbs on the weakening of the Yuan after the US threatened to impose the Currency Manipulator tag on China. With the Yuan holding around the 7/$ mark, the Indian rupee also held firm and did not weaken too much. That also worked in favour of the stock markets.

· One more thing that markets appreciated was that even as FPIs were selling in equities, they were buying into debt paper and domestic mutual funds and local institutions were buying more than the FPIs were selling. This also reassured markets.

Of course, the assumption is that the monetary policy does not disappoint the markets.