On Wednesday, the benchmark Sensex of the Bombay Stock Exchange registered its biggest single-day gain in absolute terms (893 points), tracking strong global markets. Indices across the globe exhibited renewed strength after top US banks said the worst of credit market losses may be over.
Also, reports that Left parties may allow the government to negotiate India-specific safeguards in connection with the civil nuclear deal with the US also boosted sentiment, brokers said.
The benchmark Sensex closed higher by 893.58 points, or 4.69 per cent, while the broader Nifty of the National Stock Exchange gained 242.50 points, or 4.26 per cent, to close at 5,937.90 points. The Sensex had hit an intra-day high of 19,987.71 points (up by 952.23 points). Hong Kong’s Hang Seng gained 1,362 points to end at 29,166.01 points. According to experts, strong inflows in favour of riskier assets and expectations of a further 75 basis point interest rate cut by the US Federal Reserve in the next six months, were the main propellants of this rally.
“The expectation is that the Fed may cut interest rates by 75 basis points in the next six months. And the markets have started to discount that. Further, our markets have come to a stage wherein any negative factor in other parts of the world makes India more attractive,” said Rajesh Jain, CEO of Pranav Securities.
This rally comes ahead of two big-ticket public issues that together may mop up around Rs 29,000 crore. While the Reliance Power IPO is expected to raise Rs 12,000 crore, State Bank of India is planning to collect Rs 17,000 crore through its rights issue.
The market breadth was strongly positive on the BSE with 2,024 shares advancing against 764 declines. Bulls looked eager to cross the 20,000-mark with Sensex futures closing at 20,000, at a 70.94-point premium to the underlying Sensex.