Backed by Reserve Bank of India's (RBI) decision of open market operations (OMO) and heavy buying from foreign institutional investor (FII), the benchmark Sensex on Thursday surged by 205.02 points to 20,399.42. Despite wholesale price index (WPI) inflation rising, stock markets ended the session with gains. Similarly, the broader index Nifty also rose by 66.55 points to 6,056.15.
As per experts, market sentiment changed drastically after RBI announced to inject Rs 8,000 crore through OMO to ease liquidity and contain exchange rate volatility. Apart from that, market rallied on back of heavy buying from investors and FIIs in interest sensitive sectors. Out of the 13 sectoral indices of BSE, 11 indices managed to end the session with gains.
Automobile index rose the most by 2.91 per cent followed bank and real estate indices which gained 2.66 per cent and 2.28 per cent respectively. Capital goods and power indices also rose by over 1.7 per cent each. Healthcare and information technology indices fell marginally by 0.39 per cent and 0.11 per cent respectively.
Indian stock markets also got support as Janet Yellen indicated that stimulus programme would continue. Yellen has been nominated by President Barack Obama to lead the Federal Reserve replacing Ben Bernanke.
FIIs continued their buying and invested Rs 970.03 in the equity markets, as per provisional data provided by the stock exchanges. On the other hand, market turnover dropped to Rs 1,850.06 crore on Thursday against Rs 1,910.82 crore on Wednesday. Markets are closed on Friday for Muharram.
Amid strong equity markets, rupee also continued its recover and closed at Rs 63.11 per dollar after gaining 19 paise on Thursday. Forex experts said that the domestic currency gained as stocks made a strong recovery and heavy dollar selling by exporters. Capital inflows continued to aid the rupee's rise, although a strong dollar overseas capped the gains. The dollar index was up 0.46 per cent against major global rivals. “WPI data was released, which dented sentiment.
Further gains were stalled by concerns about a possible rate hike after data showed wholesale price inflation at 7 per cent in October compared with 6.46 per cent in September. “Going ahead Janet Yellen will be closely tracked as she is expected to comment on the ongoing tapering talks,” said Abhishek Goenka, Founder & CEO, India Forex Advisors.
Forward dollar premiums recovered slightly on fresh payments from banks and corporates. The benchmark six-month forward dollar premium payable in April edged up to 246-248 paise from 245-1/2-247-1/2 paise previously and far-forward contracts maturing in October rose to 486-488 paise from 482-484 paise.