Sensex tops 85,000 after over a year, slips on sanctions jitters

MUMBAI: Dalal Street witnessed extreme volatility on Thursday, thanks mainly to expectations about better trade relations separately with India and then China. As a result, in early trades the sensex rallied above the 85K mark on prospects of a trade deal between the US and India.The Street’s mood, however, soured after oil prices went up sharply, following US sanctions against two of the largest oil producers from the country. There were also talks about postponement of a US-India trade deal which again left investors jittery, market players said.In intra-day trade, Brent prices had jumped over 5% to above the $66 mark. The rising oil prices also led to some selling in the stocks of oil marketing companies like HPCL, BPCL, Indian Oil and also Reliance Industries.

On Thursday, sensex started the session on a high, on the back of govt statements that the US-India trade negotiations were moving smoothly. The index opened over 700 points up at 85,154 points, its first break above the 85K mark in more than a year and rallied to a day’s high at 85,290 points. But as oil prices started rising, and some negative news about an US-India trade deal trickled in, the sensex hit an intra-day low at 84,445 points, up just 19 points on the day, and closed at 84,556 points, up 130 points on the day.

On NSE, nifty also followed a similar seesaw trajectory with the intra-day range between 25,862 points and 26,104 points, and the close at 25,891 points, up 23 points on the day. For nifty the day’s high was also its first break above the 26K level.According to Vinod Nair of Geojit Investments, after the strong opening, leading indices pared early gains as investors booked profits following sanctions on Russian oil and the possible postponement of India–US trade negotiations.

“As the undercurrents (about) the domestic market have improved due to a possible India-US deal and a rise in consumer demand, (going forward) the broader market is expected to do better,” Nair said in a note.The late slide in stocks also pulled down midcap and smallcap stocks sharply. As a result, BSE’s midcap index closed a marginal 0.2% down while the smallcap index was down 0.4%.Although the leading indices closed marginally higher, the late selling in the broader market left investors poorer by about Rs 59,000 crore with BSE’s market cap now at Rs 470.3 lakh crore.After remaining net buyers for the last few sessions, foreign funds again turned net sellers on Thursday with the day’s net outflow figure at Rs 1,166 crore, BSE data showed. In contrast, domestic funds were net buyers at Rs 3.894 crore. The slow and gradual return of foreign funds this month is a welcome sign for market players, they said.