Sensex, Nifty snap three-day losing streak in early trade; banks lead rebound

New Delhi: Benchmark equity indices Sensex and Nifty bounced back in early trade on Thursday, snapping a three-session losing run as buying in heavyweight banking stocks and positive cues from global markets lifted sentiment.

The 30-share BSE Sensex gained 334.16 points, or 0.44 percent, to 76,904.51 in morning trade, while the broader NSE Nifty rose 95.45 points to 24,009.90.

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Banking and select infrastructure counters led the recovery. Tata Steel, Adani Ports, Axis Bank, ICICI Bank, State Bank of India, HDFC Bank, Power Grid, Eternal, Larsen & Toubro, Bharti Airtel and UltraTech Cement were among the major Sensex gainers.

Information technology stocks, however, remained under pressure. Tech Mahindra, HCL Technologies, Infosys and Tata Consultancy Services traded lower, along with Bajaj Finance, Titan, IndiGo, Sun Pharmaceuticals and ITC.

The rebound came amid easing US bond yields and optimism over sizeable foreign-currency inflows mobilised under the Reserve Bank of India's special swap facility, which analysts expect could provide support to the rupee.

"The market sentiment is likely to look up on Thursday following the slight easing of the US bond yields. A big positive from the rupee perspective is the huge mobilisation of USD 136 billion under concessional swap facility," said V K Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd.

"The USD 127 billion mobilised under the FCNR(B) scheme has come way above the consensus estimates. The implication of this from the market perspective is that the rupee will stabilise, imparting confidence to FIIs," he added.

India mobilised a record USD 127.23 billion through Foreign Currency Non-Resident (Bank), or FCNR(B), deposits under the central bank's special programme aimed at strengthening foreign-exchange liquidity. According to RBI data released on Wednesday, FCNR(B) deposits accounted for USD 127.226 billion of inflows as of August 31.

Institutional flows also provided a supportive backdrop. Foreign Institutional Investors (FIIs) were net buyers of Indian equities worth Rs 6,688.37 crore on Wednesday, while Domestic Institutional Investors (DIIs) purchased shares worth Rs 2,812.98 crore, exchange data showed.

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Interestingly, the combined institutional purchases of about Rs 9,500 crore failed to prevent Wednesday's decline, when the Nifty lost more than 141 points.

Vijayakumar said the divergence suggested that selling pressure came from other sections of the market.

"So, it is obvious that the brunt of the selling came from retail investors, proprietary traders and bears who used the market weakness to hammer the stocks down. This is likely to reverse on Thursday," he said.

Global cues were largely positive. South Korea's Kospi, China's Shanghai Composite and Japan's Nikkei 225 traded higher, while Hong Kong's Hang Seng was in the red. US equities ended higher on Wednesday.

Brent crude, the global oil benchmark, slipped 0.17 percent to USD 95.47 a barrel.

The recovery follows three consecutive sessions of losses on Dalal Street. On Wednesday, the Sensex fell 373.93 points to close at 76,570.35, while the Nifty declined 141.35 points to 23,914.45.

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