High volatile day gives markets its 10th highest gain

The Indian markets on Aug.26 ended with its 10th highest gain, after a witnessing a high degree of volatility in the intra-day trade.

The 30-share index of Bombay Stock Exchange (BSE), Sensex closed at 37,494.12 points, a gain of 792.96 points (2.16%) over the previous close. The day was marred with a high degree of volatility in the index. In the pre-open trade, the 30-share index had gained 900 points and opened 662.79 points higher than the Friday's close.

Even as the sops announced by the government on Friday continued to push sentiment positive, domestically, the weak global cues caused a sell-off in the Indian market. In the morning trade, the Sensex wiped off all its initial gains and was trading 209 points lower than the previous close at one point of time.

However, as soon as US President Donald Trump hinted towards de-escalation of the trade war with China, markets regained the buying and Sensex jumped by 843.32 points to touch an intra-day high of 37,544.48 points. The index closed at 37,494.12, up 792.96 points, leading to daily volatility of 3.5%.

The rally in the markets was led by the bank stocks. Of the top 10 gainers on the BSE Sensex, all were bank, save Larsen & Toubro, that gained 3.63% during the day's trade. YES Bank, that has seen its stock prices deplete by over 80% in the past year, was the biggest gainer on Sensex during the day, shooting up by 6.33%.

All the indices on BSE ended the day in green, with S&P BSE Bharat 22 Index ending the day with a gain of 2.30%. The overall sentiment in the markets was also highly positive -- with 1,698 advances against 805 declines.

Similarly, the broader index, National Stock Exchange's (NSE) Nifty-50 closed the day's trade at 11,057.85 points, up 228.50 points from Friday's close.

Again, the Bank Nifty saw a massive rally of about 1,000 points during the day's trade. The index closed the day's trade at 27,951.35 points, up 992.70 (3.68%).

"Not surprisingly, the rally is led by banks and financials, given the focus on the government’s measures to recapitalize banks, ease liquidity and encourage credit demand. In the near term, the benchmark indices could test the recent high of 11,200-11,300 on Nifty, but the reversal would only be confirmed if Nifty breaks past the strong resistance convincingly,” Gaurav Dua, Senior VP, Head – Capital Market Strategy, Sharekhan by BNP Paribas.

The early indications suggest that it was the domestic institutional investors (DIIs) who led the buying in the Indian equities.