Sensex vaults 777 pts in largest single-day increase in almost 7 yrs; investor wealth up Rs 2.52 lakh cr
Expectations of a rate reduction, coupled with budgetary announcements and global cues that were positive, guided the Indian equity markets to their steepest gains on Tuesday since September 2013.
Consequently, the barometer 30-scrip Sensitive Index (Sensex) of the Bombay Stock Exchange (BSE) closed the day’s commerce up 777 points or 3.38 percent.
Likewise, the broader 50-scrip Nifty of the National Stock Exchange (NSE), also, made substantial increases during the day’s trade. It ended higher by 235.25 points, or 3.37 percent, to 7,222.30 points.
The day’s commerce closed with the maximum percentage increases since September 2013, when the pre-2014 general election rallies were first witnessed.
During the intra-day trade, the Sensex touched a high of 23,821.49 points and a low of 23,133.18 points.
The BSE market width was heavily tipped in favour of bulls — with and 601 2,011 declines.
Both the key indices of the Indian equity markets opened on a positive note, in-sync with expectations and their Asian peers of a future rate adorable.
Short covering pushed costs higher. Investors anticipate the Union Budget’s fiscal prudence measures will supply the Reserve Bank of India (RBI) room to further ease monetary policy.
Presenting the Union Budget, Finance Minister Arun Jaitley on Monday declared that the government will stick to a 3.9 percent fiscal deficit target. He also establishes a 3.5 percent target for the next financial.
Further, value-purchasing was seen at low amounts. Equity markets were lifted by buying in large caps like ICICI and ITC Bank higher.
Positive macro-data that demonstrated acceleration in India’s manufacturing activity in February supported the equity markets’ upward movement.
The monthly Nikkei’s Purchasing Managers Index (PMI) data reported a 51.1 uptrend in February. An index reading above 50 indicates an overall increase on the index.
Investors’ confidence was restored after the central government declared capital expenditure on crop insurance, infrastructure development, rural sector, agricultural credit, skill improvement and start up the initiative.
Additionally, bullish crude oil prices led investors to pursue stock prices higher. The WTI (West Texas Intermediate) prices increased by 1.2 percent to $34 per barrel.
Moreover, an investors opinions encouraged. It reinforced by 44 paise at 67.86 to a US dollar from its previous close of 68.42 to a greenback.
“Indian rupee cheered a constructive Union Budget, where government has struck a balance between fiscal consolidation and structural demands of the rural market,” Anindya Banerjee, associate vice president for money derivatives with Kotak Securities, told IANS.
“A sharp rally in bond prices have had a knock-on effect on the rupee. Over the near term, trusts of a mid-coverage rate cut from the central bank may continue to underpin Rupee. But, the zone between 67.50-70 can act a powerful support level in the pair.”
According to Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, investors expect an RBI (Reserve Bank of India) rate reduction as a consequence of the government’s commitment towards financial deficit goals.
“Hopes of macro stability following the Union Budget have restored the risk taking desire of investors. Investors expect RBI to go in for a rate reduction, as a result of government’s focus to stay on the financial deficit path,” James told IANS.
“Markets traded sharply higher led by favorable Asian discriminative stimuli after China determined to lower the reserve requirement ratio (RRR), injecting $100 billion of cash in the market,” Agarwal noted.
“We anticipate markets to merge at current levels before any powerful move.”
At the close of the day’s commerce the foreign institutional investors (FIIs) had invested Rs.2,912.59 crore, whereas the DIIs (national institutional investors) sold stocks worth Rs.834.59 crore.
Major Sensex gainers during Tuesday’s trade were ITC, up 9.91 percent at Rs.325.10; ICICI Bank, up 7.95 percent at Rs.205.10; Maruti Suzuki, up 7.80 percent at Rs.3,495.50; Hero MotoCorp, upward 6.69 percent at Rs.2,667; and Adani Ports, up 5.30 percent at Rs.206.50.
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