Sensex zooms on Euro salute, but... | business | Hindustan Times
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Sensex zooms on Euro salute, but...

As the benchmark Sensex of the Bombay Stock Exchange shot up by 516 points, or 3%, to close at a 3-month high of 17,805 amid a possible resolution of the European debt crisis, experts said that though the worst is likely to be over for now, inflation still remains a key challenge. HT reports.

business Updated: Oct 29, 2011 02:20 IST
HT Correspondent

As the benchmark Sensex of the Bombay Stock Exchange shot up by 516 points, or 3%, to close at a 3-month high of 17,805 amid a possible resolution of the European debt crisis, experts said that though the worst is likely to be over for now, inflation still remains a key challenge.

"The rally suggests that we will not see the bottom we witnessed in the past, but there are still some hurdles to be overcome before we can say the worst is over," said Ramdeo Agrawal, co-founder and director, Motilal Oswal Financial Services. "A lot will depend on how inflation behaves in rest of the year as high interest rates are adversely impacting corporate earning."http://www.hindustantimes.com/images/HTPopups/291011/29_10_biz02.jpg

Headline inflation has been hovering around 9-10% in the last nine months, much above the comfort zone. In order to tame the price monster, the Reserve Bank of India has hiked interest rates 13 times since March 2010, increasing the cost of funds for Indian companies.

Logging the biggest jump in two months, the benchmark index jumped 619 points to 17,908 in early trade. The Sensex had recorded a gain of 567 points on August 29.

The Nifty of the National Stock Exchange also ended with a gain of 159 points or 3% at 5,361.

“Apart from the international factors, the rally was also supported by local factors as the Reserve Bank of India in its policy indicated of not hiking rates in December and also inflation cooling in the second half of the fiscal,” said Sunil Jain, vice president, equity Research, Nirmal Bang Securities. “We will not see the bottoms that were seen in past few months.”

Cheering the European deal, Asian markets also ended in the black. Japan’s Nikkei closed up 1.4%, Hang Seng in Hong Kong up 1.7%, Germany’s DAX was up 0.2% while UK’s FTSE 100 closed up 0.4%.

Amongst the sectoral indices, the BSE metal index surged 6.3%. The realty index rose 5%, while the bankex gained 3.7 % and the capital goods index 3.5%.

In the 30-share index, 27 stocks ended with gains.