NEW DELHI: Equity markets recorded their biggest single-day gain in nearly three months on Wednesday, on the back of global cues after robust US housing data indicated a strong recovery for the world’s largest economy.
Encouraging quarterly results and expectations of a good monsoon also aided the rally.
The Sensex closed 575.70 points, or 2.28%, higher at 25,881.17, while the broader Nifty closed 186.05 points, or 2.40%, higher at 7,934.90 — the biggest single-day gain since March 1.
NSE’s VIX, or volatility index, plunged 4.31% to 15.52, its lowest level since the beginning of 2016.
Separately, in a note on Wednesday, Morgan Stanley raised its rating on India to “overweight” from “equal weight”, citing supportive macro environment. “India’s macro climate is well placed with little deflation threat, favourable demographics, low overall debt, and possibility of productivity enhancing reforms,” analysts at the global investment bank said.
“Markets notched spectacular gains on the back of several positive global cues and value buying,” said Sanjeev Zarbade, vice-president, Kotak Securities.
Many stocks with a strong rural focus rose on Wednesday after Skymet forecast above normal monsoon rains. Good monsoon this year after two years of consecutive drought is expected to boost consumption demand in rural markets.
Twenty nine of the 30 Sensex stocks ended with gains, led by ICICI Bank (up 4.48%), Bhel (up 4.34%) and L&T (up 4.02%).
Among the sectoral indices, bankex rose 3.17%, followed by capital goods (up 2.96%), finance (up 2.59%) and IT (up 2.25%).
“The Nifty has closed above 7,900, which was its previous resistance, and now 8,000 is the next resistance for the market,” said Dhruv Desai, director and chief operating officer, Tradebulls.
However, “the markets may remain volatile due to global headwinds,” said Vaibhav Agarwal, vice-president, Angel Broking.
Breaking its nine-day slide — the longest since 2007 — the rupee gained 42 paise to close at 67.33, after selling in the US currency by exporters accelerated.