The benchmark Sensex of the Bombay Stock Exchange on Friday surged by 439 points, or 2.6%, to close at more than a two-month high of 17,430 points, after the government issued clarifications on general anti avoidance rules (GAAR) and after European leaders agreed on a more decisive action to lower the borrowing costs of Italy and Spain and create a single supervisory body for euro banks.
The Nifty also closed up 2.5%, or 130 points, at 5,279.
Experts say there may be similar rallies if the government takes more such reformist steps.
“Positive consideration on GAAR and tax issues by the government has lifted the sentiments of investors who expect more such positive moves from policy makers,” said Deven Choksey, CEO, KR Choksey Shares and Securities. “If government takes more such steps which can address the issues of low growth, high fiscal deficit and inflation, then we can see more such rallies,” he said.
“Markets trends would be broadly determined by the ongoing developments in the euro zone debt crisis, domestic inflation and government reforms,” said Dipen Shah, head of fundamental research, Kotak Securities. “With euro zone leaders intent on not allowing major defaults or bankruptcies, focus will likely shift to inflation and government reforms.”