Hope of a possible rate cut after RBI Governor D Subbarao said in Frankfurt he had taken note of falling inflation inspired bulls so much that Sensex vaulted 490 points on Wednesday and closed at 28-month high of 20,200, while Nifty surged over 150 points to end at 6,100- level making investors richer by Rs1.30 lakh crore in a day.
Market analysts say so thirsty is the market for any positive news that whenever there is any, bulls participate in the rally with full force.
Sensex resumed higher and gradually rose to settle at 20,212.96, a rise of 490.67 points. Previously, it had concluded at 20,301.10 on January 5, 2011. Wednesday’s gain is the highest in percentage terms since June 2012. Nifty jumped by 151.35 points to end at 6,146.75. Similarly. MCX-SX flagship index SX4O closed 245.6 points, or 2.10 per cent. higher at 11.925.14.
“Global as well as domestic factors have been at play. Globally, the market sentiment for equities has improved dramatically. The Dow Jones has been very firm and so has been the Nikkei, which hit a five year high. The domestic factors driving the rally include softer commodity prices, reducing under-recoveries on auto fuels and weakening inflation. Clearly, the rally has been partly fuelled by heightened expectations of further easing by the central bank going forward,” said Sanjeev Zarbade, Vice President- Private Client Group Research, Kotak Securities.
“We certainly will take note of the softening of inflation and the external payments situation in the next mid-quarter policy statement on June 17,” RBI Governor D Subbarao said in Frankfurt. He said, he was happy to see that inflation has come down to below 5 per cent.
Mortgage major HDFC, state-run SBI and private lender ICICI Bank were the star performers of the day with gains of 3.8-4.7 per cent. Smart rise in RIl, ITC, l&T, Tata Motors, M&M and ONGC helped the trio together contribute over 400 points to the Sensex surge.
Besides interest-rate related stocks, PSU, refinery, pharma, metal and consumer durables also attracted buying.
Rate-sensitive S&P BSE-Realty was the biggest gainer among sectoral indices at 4.04 per cent, followed by BSE Bankex (3.95 pc), BSE-CG (3.00 pc) and BSE-PSU (2.36 pc).
Higher advices from international markets, coupled with sustained capital inflows from foreign funds, also boosted the market sentiment. Foreign Institutional Investors (FIIs) bought shares worth Rs1,646.95 crore as per provisional data from the stock exchanges.
Asian shares closed higher with Japan’s Nikkei Average surging to a fresh five-and-half year high as Japanese exporters rallied on the yen’s sharp slide. Key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan rose by 0.12 per cent to 2.29 per cent.
However, European markets were trading narrowly mixed after reports said GDP data of Germany just narrowly avoided contraction in the first quarter and France slipped into recession. The CAC was quoting up by 0.08 per cent while the DAX was down by 0.10 per cent and the FTSE by 0.22 pct.
US stocks rallied to record highs yesterday continuing an ascent driven by the Federal Reserve’s easy monetary policy. Moving back to the local market, 29 scrips out of the 30-share Sensex pack ended higher while Wipro ended down.
Major gainers from the Sensex pack were HDFC (4.70 pc), SBI (4.07 pc), l&T (3.85 pc), ICICI Bank (3.8 pc), HDFC Bank (2.72 pc), M&M (3.6 pc), Cipla (3.25 pc), Hindalco (2.7 pc), Reliance Industries (2.65 pc), ONGC (2.63 pc), Tata Motors (2.63 pc) and Jindal Steel (2.49 pc).
NTPC (2.15 pc), Bajaj Auto (2.14 pc), Maruti Suzuki (2.07 pc), ITC (2.01 pc), Dr Reddy’s lab (1.92 pc), Hero MotoCorp (1.89 pc), Coal India (1.80 pc), Bharti Airtel (1.64 pc), Sterlite Industries (1.58 pc), Tata Steel (1.53 pc) and BHEl (1.30 pc) also notched up smart gains.
“lower inflation numbers coupled with ample liquidity flow from FIIs is helping the stock market to rise higher and sometimes even surprise,” said Nagji K Rita, Chairman & MD, Inventure Growth & Securities.
Among the sectoral indices, besides realty, banking, capital goods (CG) and PSU - S&P BSE-Auto (2.29 pc), S&P BSE-Oil&Gas (2.19 pc) and S&P BSE-HC (2.04 pc) saw gains.
Total market breadth turned positive as 1,466 stocks closed with gains while 973 scrips finished with losses. 160 stocks ruled steady. Total turnover rose to Rs2,277.27 crore from Rs1,671.47 crore on Tuesday.