Sensex climbs on European bounce, FII flows

After last week’s strong show and Monday’s resilient performance, Tuesday turned out to be even better for the Indian market, with the main equity indices managing to close with smart gains after a bad start.

Finally, the BSE Sensex ended at 16,862, adding 149 points. It had earlier touched a day's high of 16,894 and a day's low of 16,488. It opened at 16,663. The NSE Nifty closed at 5,064, up 47 points.



Steep losses in the European markets and continued weakness in the Asian markets pressured the benchmark Indian indices in the early trades. However, the markets turned around after a positive opening in the recently battered European markets.

It may be recalled that European indices have taken a severe beating in the past couple of sessions on mounting worries about the region's deteriorating debt crisis.

The US index futures pared losses following the bounce back in European indices today. The US financial markets were shut on Monday due to the Labour Day holiday.

The undercurrent across global markets has been shaky of late given the worsening debt problems in the eurozone and slowdown in the US economy.

The strong recovery was led by strength in Oil & Gas, Banking, IT and Auto stocks. Even the Mid-Cap and the Small-Cap stocks saw some buying. The Nifty pulled back ~130 points while the BSE Sensex recovered 400 points from their respective intra-day lows.

"India has shown commendable resilience in the past few sessions, as FII inflows have picked up. It remains to be seen whether the positive trend in FII flows stays in tact. Inflation numbers on Sept. 14 and the RBI meet on Sept. 16 are among the few important near-term events to keep on one’s radar apart from daily global developments. From next month, we will also have to contend with the latest batch of corporate results," says Amar Ambani, Head of Research, IIFL - India Private Clients.

Meanwhile, the Swiss franc tumbled versus the euro after the nation’s central bank set a minimum exchange rate of 1.20 per euro and said it will defend the target with the "utmost determination" if needed.

The Australian dollar fell to its lowest in more than a week after the Reserve Bank of Australia (RBA) kept the benchmark rate unchanged at 4.75% today.

Spot gold touched a new record peak above US$1,920 an ounce before retreating on the Swiss central bank's move to intervene in the currency markets.