Sigh of Relief on Dalal Street as China Markets Stem Fall
Stocks recover from Thursday’s rout after China moved to stabilise the yuan and suspended the circuit breaker system.
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- Sensex recovers 200 points to rise above 25,000; Nifty above 7,600.
- China rises 2 percent after regulator axes circuit breakers and fixed yuan higher.
- Rally led by gains in RIL, Sun Pharma, HDFC Bank, Infosys, Tata Motors, and Axis Bank.
- Rupee snaps 2-day losing streak.
Markets staged a comeback on Friday morning. The benchmark Sensex surged over 200 points in following Asian markets which were trading higher after the People’s Bank of China (PBoC) set its yuan fix rate higher at 6.5636, signaling the Chinese central bank is unwilling to let the currency slide.
The rally in the index was led by gains in RIL, Sun Pharma, HDFC Bank, Infosys, Tata Motors, and Axis Bank.
The Nifty rose above its crucial level of 7,600 supported by gains in realty, power, oil and gas, metals, capital goods and bank stocks.
Rupee Snaps 2-Day Losing Streak
The currency too found some relief. Snapping a two-day losing streak, the rupee rose 18 paise to 66.75 in early trade as Asian currencies recovered. Reports suggest the Chinese central bank PBoC was intervening in trading to support the tumbling yuan.
The domestic currency had declined by 11 paise to close at three-week low of 66.93 against the greenback in the previous session on persistent dollar demand from banks and importers.
China Recovers, Rest of Asia Follows Suit
Asian shares rebounded, led by strong gains for battered Chinese stocks after China suspended its market circuit breaker and set a firmer midpoint rate for trading of the yuan for the first time in nine days.
Shares in Asia were still on track for their biggest weekly fall in more than four months, but Friday’s advances seemed to reduce some of the fears that have hit global markets.
China announced late on Thursday it suspended its new stock market circuit breaker introduced only on Monday as the system failed to reduce market volatility, with some market players even saying it backfired.
The CSI300 index of major Shanghai and Shenzhen stocks was up 2.7 percent and the Shanghai Composite climbed 2.4 percent.
The gains shrank losses for the week for both to less than 10 percent.
In the US on Thursday, the Dow and S&P 500 lost more than 2 percent while the Nasdaq shed 3 percent. London, Paris and Frankfurt were also pummelled, as were Latin American bourses.
Also read: The World is in a Tizzy Over China: What’s Ailing That Economy?
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