With Federal Reserve continued its stance to retain low rates, the S&P BSE Index staged a record gain of 481 points and closed the session at 27,112.21 on widespread buying by both foreign and domestic institutional investors. Amid optimism over trade ties with China and rise in foreign capital inflows, the CNX Nifty also soared 139 points ending the session at 8,114.75.
The 30-share benchmark index rallied to reclaim its crucial psychological level of 27,000 mark, supported by gains in consumer durable, pharma, oil & gas and realty stocks. US Federal Reserve’s decision to keep interest rates near zero for a considerable time has boosted the sentiments of the market participants, giving immediate relief to the emerging markets like India.
Shrikant Chouhan, Head of Technical Research, Kotak Securities said, “The primary reason for the rise was the announcement from the Fed Reserve is to delay in Rate Hike till summer 2015. That has triggered fresh buying in the market.”
However, analyst also feels that when US again starts increasing their rates it will certainly have some impact on emerging markets in the form of capital outflows.
Meanwhile, Chinese President Xi Jinping who is on a three-day visit to India is expected to pledge billions of dollars for upgrading India’s infrastructure.
In a statement, the US Federal Reserve Chairwoman Janet Yellen yesterday in its policy setting meeting promised to keep the interest rates near zero for a “considerable time after its bonds buying programme comes to an end in October, giving immediate relief to the emerging markets, including India as fears of immediate capital outflows have subsided.
Meanwhile, India on Thursday signed a 5-year trade and economic cooperation agreement with China with a view to improve the trade balance and obtain USD 20 billion Chinese investments.
“With US rate rise possibilities becoming a more distant reality, emerging economies including India can expect to keep their hot monies ‘hot’ for some more time,” said Debopam Chaudhuri, Chief Economist, ZyFin Research.
Major Sensex gainers were Hero Motocorp (5.67 per cent), HDFC (3.73 per cent), Tata Motors (3.70 per cent), l&T (3.57 per cent), BHEl (3.51 per cent) and Bajaj Auto (3.47 percent).
Participants were truly excited by the prospects of huge investments by China in India’s infrastructure, railway & manufacturing projects, according to Devang Mehta, Sr. VP & Head - Equity Advisory, Anand Rathi Financial Services.
Asian stocks gained in choppy trade after the US Federal Reserve after a two-day policy meet renewed a pledge to keep interest rates near zero for a considerable time and announced a further USD 10 billion reduction in monthly bond purchases. Key benchmark indices in China, Singapore, Taiwan andJapan rose by 0.02 per cent to 1.13 per cent, while indices in Hong Kong and South Korea fell 0.72 per cent to 0.85 per cent.
Europe was also trading higher as indices in France, Germany and the UK moved up by 0.34 per cent to 0.60 per cent.
Jignesh Chaudhary, Head Of Research, Veracity Broking Services said: “Indian equities continued to trade strong for the second day with the help of bluechips as global equities traded strong after the Fed stated that rate hikes would not happen for a considerable time.”
In the 30-share Sensex pack, 28 scrips ended higher while only two finished lower.Major gainers include Dr Reddy’s lab (3.34 per cent), Tata Power (2.86 per cent), Maruti Suzuki (2.48 per cent), NTPC (2.43 per cent), Wipro (2.40 per cent), ICICI Bank (2.37 per cent), SBI (2.21 per cent), TCS (1.86 per cent), Axis Bank (1.73 per cent) and Reliance Industries (1.67 per cent).
However Infosys dropped 1.08 per cent and HUl fell 0.58 per cent.Among the S&P BSE sectoral indices, Realty rose by 4.65 per cent, Consumer Durables 3.17 per cent, Capital Goods 2.84 per cent, Power 2.23 per cent, Bankex 1.98 per cent, Healthcare 1.76 per cent, Oil&Gas 1.61 per cent and Metal 1.23 per cent.
“After steep recovery, its likely that markets would witness pause on Friday; however, stock specific move will keep the traders busy,” said Jayant Manglik, President-retail distribution, Religare Securities.Total market breadth turned positive as 2,235 stocks closed in the green, 827 finished in the red while 94 ruled steady.