A benchmark index of Indian equities markets Tuesday closed nearly one-and-a-half percent or 283 points up, a day after government announced a slew of measures to control the current account deficit (CAD) amidst the falling value of the rupee.
The 30-scrip S&P Sensex of the Bombay Stock Exchange (BSE), which opened in negative at 18,895.26 points, closed at 19,229.84 points, up 1.49 percent or 282.86 points from its previous day close at 18,946.98 points.
The Sensex touched a high of 19,248.11 points and a low of 18,864.81 points intra-day.
Government Monday said that it will lower CAD to 3.7 percent of the gross domestic product (GDP) in the current financial year by cutting imports, especially of gold, silver, oil and non-essential items.
Finance Minister P. Chidambaram said his ministry in consultation with the Reserve Bank of India (RBI) and other ministries including commerce and oil, had outlined a plan to contain CAD at $70 billion in the current financial year.
India's current account deficit has surged to a record high of $88.2 billion, or 4.8 percent of the country's GDP.
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The announcement was received positively by the markets and major sectors like bank, automobile, healthcare, information technology (IT) and technology, entertainment and media (TECk) saw healthy buying.
However, heavy selling pressure was witnessed in consumer durables and metal scrips.
The S&P BSE bank index closed higher by 323.30 points, automobile index was up 238.54 points, healthcare index was higher by 149 points, IT index was up 132.46 points and TECk index was 78.67 points up.
However, the S&P BSE consumer durables index lost 12.59 points, followed by metal index which decreased by 3.60 points.
"Today's rally was partly due to some bottom-fishing and optimism on the rupee after government announced measures to control the CAD," said Sanjeev Zarbade, vice president, private client group research, Kotak Securities.
"With the result season nearing an end, the market would now be reacting to the movement in the rupee, global developments and reforms from the government. However, crude prices continue to trade at elevated levels, which is a concern."
The wider 50-scrip Nifty of the National Stock Exchange (NSE) closed Tuesday's trade 86.90 points or 1.55 percent up at 5,699.30 points.
A majority 25 companies of the 30-sensitive index were gainers. These included NTPC, up 4.01 percent at Rs.143.85; Tata Motors, up 3.61 percent at Rs.291.15, Bajaj Auto, up 3.20 percent at Rs.1,864.80; ICICI Bank, up 3.10 percent at Rs.893.10 and HDFC Bank, up 3.06 percent at Rs.620.
The losers were: Hindalco Inds, down 2.45 percent at Rs.91.45; Coal India, down 2.15 percent at Rs.268.45; ONGC, down 0.97 percent at Rs.274.95; Jindal Steel, down 0.55 percent at Rs.225.70; and ITC, down 0.46 percent at Rs.334.20.
Among the Asian markets, Japan's Nikkei closed 2.57 percent down in Tuesday's trade; Hong Kong's Hang Seng was up by 1.21 percent and China's Shanghai Composite Index was higher by 0.23 percent.
In Europe, London's FTSE 100 was trading 0.42 percent up. Germany's DAX Index was 0.57 percent higher and the French CAC 40 Index was up 0.18 percent.