Sensex surges 100 points on ECB stimulus; Nifty50 above 7,500

NEW DELHI: The S&P BSE Sensex traded higher by over 100 points in morning trade on Friday as the European Central Bank (ECB) extended stimulus but warned that it was running out of room to cut interest rates.

The euro zone central bank on Thursday cut deposit rate by 10 basis points to -0.4 per cent from -0.3 per cent and increased its monthly asset purchases volume to 80 billion from 60 billion earlier.

“Rates will stay low, very low, for a long time and well past the horizon of our purchases,” Draghi said, referring to the bank’s asset purchase programme, which is due to end in March 2017, Reuters reported.

But “from today’s perspective and taking into account the support of our measures to growth and inflation, we don’t anticipate that it will be necessary to reduce rates further,” it quoted Draghi as saying.

The Nifty50 was trading above its crucial resistance level of 7,500 supported by gains in realty, oil & gas, metal, capital goods, and auto stocks.

The broader market traded flat with the BSE midcap and smallcap indices gaining 0.08 and 0.10 per cent, respectively.

Market @ 9:20

The 30-share index was trading at 24,602, down 20 points or 0.10 per cent. It touched a high of 24,685.52 and a low of 24,595.39 in morning trade.

The Nifty50 was trading at 7,477 down 10 points or 0.12 per cent. It touched a high of 7,504.90 and a low of 7,476.35 in the first 30 minutes of trade.

The S&P BSE Midcap Index was down 0.07 per cent and BSE S&P Smallcap Index was trading 0.07 per cent higher.

RIL (up 0.8 per cent), Coal India (up 0.82 per cent), NTPC (up 0.75 per cent), Adani Ports (up 0.42 per cent), and GAIL India (up 0.4 per cent), were the major Sensex gainers.

Sun Pharma (down 1.7 per cent), ICICI Bank (down .70 per cent), M&M (down 0.5 per cent), and BHEL (down 0.48 per cent) were the major Sensex losers.

Further downside likely: Technical experts said a ‘bearish belt hold’ was formed on the Nifty50 charts on Thursday, suggesting that investors who bought positions at the opening of the bar are now sitting on losses, which has added to the selling frenzy.

“Further weakness will be confirmed if Nifty50 consistently trades below 7,400 and closes below it. In such a scenario, the immediate target can be expected in the 7,350-7,300 zone,” said Vivek Gupta, CMT – Director Research, CapitalVia Global Research .

Mitesh Thacker of miteshthacker.com said, “For the time being, it is more of a sideways action. On an intraday basis, Nifty has taken support around the 7,430-7,420 mark. That is the lower pivot. On the upside, 7,550 becomes an important level. My sense is that we might continue this consolidation over the next few days. I think we will maintain a positive bias and the idea should be to keep buying on declines and add more long bias on a stock-specific basis.”

Asian markets trading lower: Asian markets were trading mixed at the time of writing of this report. Japan’s benchmark Nikkei was trading 0.93 per cent lower at 16, 696. China’s CIS300 fell 0.27 per cent to 3,005.

Other Asian indices, including Hong Kong’s Hang Seng (up 0.06 per cent), South Korea’s Kospi (up 0.23 percent) and Taiwan’s TWSE (up 0.12 per cent) were trading higher.

US markets ended flat on crude price and signals from the euro zone: The Wall Street ended flat on Thursday, with the Dow Jones index falling 0.03 per cent to settle at 16,995.13. The index had risen in early trade on ECB stimulus plan. However, Draghi’s comments and a decline in US crude prices weighed on sentiments.

US crude prices inched down after the EIA said crude oil inventories increased by 3.9 million barrels during the week ended March 4, in line with consensus estimate. US crude ended the day at $37.84 a barrel, down 45 cents, or 1.18 per cent. Brent crude futures, on the other hand, were down $1.02 at $40.05 a barrel.