The benchmark Sensex surged in its biggest single-day gain in 22 months on Tuesday as stock markets saluted a Budget that spelt some positive measures for overseas fund inflows, while an easing of oil prices strengthened global sentiments that boosted optimism among traders and investors.
The 30-share index rose 623 points or 3.5% to 18,446.5 in its third straight day of gains. On March 1, 2000 the Sensex had jumped 3.6% to touch 5,642.12. In absolute terms, the Sensex has never had such a big gain in post-Budget trading.
Market watchers said some lingering doubts on the Budget for 2011-12 that had kept the market edgy late on Monday eased while expectations that India’s economy will outpace China — which has scaled down its GDP growth target to 7% against India’s expected 9% — added to the positive mood.
“Raising investment limits for foreign institutional investors (FIIs) in corporate infrastructure bonds by $20 billion and permitting them to invest in unlisted special purpose vehicles (SPVs) and mutual funds are positive news that will enable significant foreign flows into the Indian market,” said Ajay Parmar, head of institutional equities at Emkay Global Financial Services.
The optimism was evident despite concerns expressed by finance minister Pranab Mukherjee that the consequence of the political unrest in West Asia, which last month pushed up crude prices, was still uncertain. The market seemed happy with a broad push for private sector investments.
“We have to ensure that the revival in private investment is sustained and goes back to the pre-crisis growth rates,” Mukherjee told industry leaders at industry chamber Ficci.