Sensex vaults 3% on hopes of Europe solution...
The 30-share benchmark Bombay Stock Exchange (BSE) index, the Sensex, rebounded strongly on Monday, to close up 3% at 16,167 points, a gain of 472 points from Friday’s closing, mainly on global cues. This was the biggest single day gain for the Sensex in three months. HT reports. Bulls on a comeback run?business Updated: Nov 29, 2011 01:22 IST
The 30-share benchmark Bombay Stock Exchange (BSE) index, the Sensex, rebounded strongly on Monday, to close up 3% at 16,167 points, a gain of 472 points from Friday’s closing, mainly on global cues. This was the biggest single day gain for the Sensex in three months.
The 50-share Nifty at the National Stock Exchange (NSE) also closed up by 3% to end the day at 4,851.30 points.
This, despite the news of an International Monetary Fund-led bail out plan for Italy turning out to be a rumour.
A strong showing by Asian markets led by Hong Kong’s Hang Seng and Singapore’s Straits Times index, which gained almost 2%, also boosted investor sentiment.
In Europe, the FTSE at the London Stock Exchange (LSE) was up 2.1% at 5,273 points while the DAX at Frankfurt rose 3.2% to 5667 on the back of assurance given by the European Central Bank (ECB) that the euro currency would not be discontinued.
“Although the news about the IMF bail out turned out to be false, the ECB said that Italy has a budget surplus and the euro will not break,” said Jigar Shah, head of research at Kim Eng Securities.There have been sustained fears of discontinuation of the euro following the prolonging of the eurozone crisis with differences between France and Germany stalling a possible recovery.
The rally was led by metals, banking and commodities stocks. Among the major gainers were Hindalco, up by 9.9%, ICICI Bank, up by 4.4% and RIL, which rose by 3.9%.
“Everyone knows this is not sustainable as nothing decisive has happened. This rally may continue for a while but for a sustained rise, we’ll have to wait and see if there’s no more negative news,” Shah said.
However, analysts expect positive sentiment to prevail, following closely on the heels of the decision to allow FDI in multi-brand retail last week.
“Markets had fallen quite a lot, so a recovery was expected as valuations are attractive and we expect an upward trend,” said Sarabjit Kour Nangra, vice-president, at Angel Broking.
...even as Moody’s talks EU downgrade
Moody’s Investors Service warned on Monday the rapid escalation of the eurozone sovereign and banking crisis threatens the credit standing of all European government bond ratings.
“While Moody’s central scenario remains that the euro area will be preserved without further widespread defaults, even this positive scenario carries very negative rating implications in the interim period,” it said. Moody’s also noted the political impetus to implement an effective resolution plan may only emerge after a series of shocks, which may lead to more countries losing access to market funding. Reuters