The stock market pushed behind a fortnight of negative news on Wednesday with the benchmark Sensex jumping 434 points or 2.7% in its biggest one-day jump this year as optimism returned to traders.
Investors and speculators clawed back from last week's news of the worst quarterly growth in the GDP in nine years and lower projections by international banks as the Prime Minister chaired a meeting to push infrastructure, while the monsoon — the annual sustainer of the Indian economy — kept its date of arrival a day earlier.Expectations of a rate cut by the RBI in the backdrop of a strong industrial slowdown surged, and global sentiments improved as well with a rescue plan in crisis-hit euro zone looking more likely than last week, amid an easing of oil prices.
While the Sensex at the Bombay Stock Exchange hit 16,454, the broader Nifty of the National Stock Exchange surged by 133.8 points or 2.75% to touch 4,997.1 on Wednesday.
"The crude prices are well below peak and the monsoon have arrived on time in Kerala. These are the two main reasons why the inflation will come under control. The market expects that this could lead to a policy easing by the RBI," said Alex Mathew, head of technical research, Geojit BNP Paribas Financial Services.
Analysts said retail investors could buy select stocks depending on the kind of exposure they wish to have. "We expect the Nifty to go at the most up to 5,065 within next couple of months," said Mathew.
Not all were buying the mood.
“Factors like inflation, interest rate, industrial production, GDP, politics, investment sentiments are all against the economy, most of them at the mercy of political will," said Vijay Kedia, director, Kedia Securities.