Sensex surges 517 points as oil, RBI drive markets
The Sensex on Monday surged 517 points, or 1.88%, to end at 27,975.86, as banks and other large-cap stocks rose after the Reserve Bank of India relaxed provisioning norms for bad loans that would improve the balance sheets of most lenders.business Updated: Mar 30, 2015 22:44 IST
The Sensex on Monday surged 517 points, or 1.88%, to end at 27,975.86, as banks and other large-cap stocks rose after the Reserve Bank of India relaxed provisioning norms for bad loans that would improve the balance sheets of most lenders.
Positive global cues including a fall in oil prices, and value buying across sectors, also boosted sentiment, and pushed the BSE benchmark to its biggest single-day gain in over two months.
The broader NSE Nifty also ended up 150.90 points, or 1.81%, to 8,492.30, after eight days of losses.
“Since there has been heavy sell-off recently and markets have corrected, investors have again started buying,” said Hemant Kanawala, head of equities at Kotak Mahindra Life Insurance.
RBI allowed banks to use 50% of their “counter-cyclical buffer” — a mandatory fund that lenders set aside to deal with extraordinary economic shocks — to provide for non-performing assets, up from 33% allowed earlier.
Monday’s rally was also in line with a global rally in equities after news that China’s central bank has asked its government to pull up the slowing economy. The MSCI emerging markets index was up 0.9%, S&P’s index futures 0.7% and Stoxx Europe by 0.7%.
“Firm global cues combined with oversold positions in index majors triggered the rebound initially, which accelerated following buying interest,” said Jayant Manglik, president, retail distribution, Religare Securities.
Bharti Airtel was the top Sensex gainer with a 3.55% rise, followed by HDFC (up 3.52%) and ONGC (up 3.49%). The mid-cap and small-cap indices were up 1.93% and 3.40%, respectively.
“Other immediate factors will be the RBI meet on April 7 and indications emerging from corporates on their fourth quarter earnings,” said Vinod Nair, head, fundamental research, Geojit BNP Paribas. “We cannot expect an immediate cut in interest rate, but we have to look at the RBI’s scope to surprise the market.”
“Whenever bull markets correct after 20-30% gain, they can give away 8-10% easily. But from a 3-5 year perspective Indian equity markets look attractive,” said IIFL chairman Nirmal Jain. “Also when we talk about FII inflows it doesn’t come from only the US... money comes from West Asia, Japan and Europe as well.”