With the fall of inflation and IIP numbers, the benchmark BSE Sensex reclaimed 27,000-mark again on Wednesday, surging by 374 points. The market cheered on heavy buying in banks, consumer goods and auto stocks on Reserve Bank of India's rate cut hopes too. Besides, short-coverings by participants at lower levels, recovery in rupee and firm global cues helped the Sensex bounce back after on Tuesday's 630-point plunge.
Meanwhile, the rupee ended higher by 17 paise to 64.00 against the American currency on fag-end selling of dollars by banks and exporters on the back of strong recovery in the equity market. The rupee resumed lower at 64.20 per dollar against the on Tuesday's closing level of 64.17 at the Interbank Foreign Exchange (Forex) Market on initial dollar demand from banks and importers.
The upside was also supported by gains related to inclusion of some stocks in MSCI India index. MSCI Inc announced that eight companies including Bharti Infratel, Eicher Motors, lupin and Bharat Forge will be added to the list. At present, companies such as Infosys, HDFC, TCS, RIl, Sun Pharma and ITC are part of MSCI India index.
Retail inflation, which fell to a four-month low in April and industrial output growth slipped to a five-month low in March, increased changes of an interest rate cut by the RBI at its next meeting. "latest CPI trajectory provides scope to cut rate by the next RBI meet in June 2. This is likely to provide a support to the range-bound correction led by FIIs due to global factors," said Vinod Nair, Head of Fundamental Research at Geojit BNP Paribas Financial Services.
In volatile movements, the 30-share Sensex opened firm and regained the crucial 27,000-mark to touch the day's high of 27,299.80 led by gains in rate-sensitive stocks. On emergence of profit-booking it slipped into negative zone to touch day's low of 26,750.01. Meanwhile, HSBC on Wednesday changed its stance on the country to "underweight", saying corporate earnings may remain muted, monsoon could be weak and odds are against rate cuts. Discounting HSBC downgrade, Sensex staged a strong comeback towards the middle of session and settled the day 373.62 points or 1.39 per cent higher at 27,251.10.
"Though during the day indices collapsed and gave up all it gains as HSBC downgraded Indian equities to underweight from overweight. After the immediate reaction, investors overlooked the situation and helped indices to add over 1 per cent as blue-chip companies ended higher on value buying," said Jignesh Chaudhary, Head Of Research at Veracity Broking Services.
Out of of 30 Sensex stocks, 22 ended in the positive zone. At the close, banking and capital goods and auto indices, power, oil & gas, FMCG and consumer durable notched gains, while realty fell on profit-booking. Major gainers on the index were Axis Bank 4.95 per cent, GAIl 3.08 per cent, ICICI Bank 2.88 per cent, SBI 2.52 per cent, M&M 2.48 per cent, HDFC 2.38 per cent, BHEl 2.27 per cent, Tata Power 2.24 per cent and larsen 2.02 per cent.