Taking a cue from global markets that rose on account of softening crude oil prices, the benchmark Sensex of the Bombay Stock Exchange bounced back by 434 points, or 2.3%, on Wednesday to close at 19,696.9. The gain was followed by a loss in five consecutive trading sessions.
The Nifty of the National Stock Exchange also rose by 125.8 points, or 2.2%, to close at 5,911.5.The whole of Asia and Europe closed in the black as indices in major markets rose by around 1% during the day.
“Cooling down of crude oil prices had an impact and the Indian markets also witnessed short covering of the positions that were built when crude rose,” said Pankaj Pandey, head of research at ICICI Securities.
While the short-and-medium term concerns with regard to elevated levels of crude oil prices, inflation and high interest rates prevail, experts feel that the long-term potential of the Indian markets remain strong and that foreign institutional investors will continue to invest in Indian markets.
“There are various areas of concerns such as high crude oil prices, rising inflation and there is definitely a concern on margins as a result of rising input, interest costs and wages. However, global investors are excited about emerging markets and they are investing for the longer term,” said the head of equities at a leading mutual fund.
While Wednesday’s rally was more broadbased, the capital goods index and the auto index at the BSE rose by 2.7% and 2.5% respectively. The banking index rose by 2.3% during the day.