Markets rise for 3rd day on global cues
₹549 crore, DIIs net purchased ₹595.7 crore, implying that retail direct investors also chipped in significantly to Monday’s rally. The sentiment turned after 1 November when the Fed kept a key interest rate unchanged for a second time since September, after hiking it from near zero last March to 5.25% through July this year . The US 10-year treasury slipped from 4.73% on 1 November to 4.59% intraday 6 November while dollar index which measures the dollar against a basket of six currencies fell 1.85% to 104.90 intraday 6 November over the same period.
“The Indian markets are being driven by the risk-on in the global markets following a dovish pause by the Fed, reinforced by weak jobs data in October, which could well be the beginning of an early Santa Claus rally," said Andrew Holland, CEO, Avendus Capital Public Markets Alternate Strategies. “The weak jobs report takes pressure off the Fed to hike again in December and raises expectations of interest rate cuts next year, which the markets could begin pricing in. This will result in short-covering in equities and bonds, which we are seeing in India, too." FPIs sold shares worth ₹24,548 crore last month , the most in nine months and raised cumulative net bearish bets on index futures to a near record high of 175,698 on 2 November , the most since the 196,378 contracts they net sold on 22 March.
To be sure, they cut the shorts to 162,694 contracts on 3 November. Data for 6 November wasn’t uploaded by NSE till press time. Further short covering could push the market higher.
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