)
The benchmark BSE Sensex on Friday jumped about 500 points, after data showed Wholesale Price Index-based inflation dropped to record lows, triggering hopes of a cut in the policy rate by the Reserve Bank of India (RBI) ahead of its monetary policy review in September.
A sharp decline in oil prices, coupled with a mild appreciation in the Chinese currency, also helped improve investor sentiment.
The 30-share Sensex closed at 28,067.31, up 517.8 points, or 1.88 per cent, the most since May 8. The broad-based Nifty gained 162.7 points, or 1.95 per cent, to close at 8,518.55. The gains were primarily led by banking stocks, including ICICI Bank, State Bank of India and HDFC Bank.
Oil prices fell about three per cent to the lowest in about six years. A fall in oil prices is considered a major positive for import-dependent India. In the past year, oil prices have dropped about 50 per cent, helping India improve its fiscal situation and bring inflation under control.
“The enormous fall in commodity prices helps India to the top of the tree,” Jonathan Garner, head of Asia and emerging-market strategy, Morgan Stanley, told Bloomberg TV.
A sharp decline in oil prices, coupled with a mild appreciation in the Chinese currency, also helped improve investor sentiment.
The 30-share Sensex closed at 28,067.31, up 517.8 points, or 1.88 per cent, the most since May 8. The broad-based Nifty gained 162.7 points, or 1.95 per cent, to close at 8,518.55. The gains were primarily led by banking stocks, including ICICI Bank, State Bank of India and HDFC Bank.
Oil prices fell about three per cent to the lowest in about six years. A fall in oil prices is considered a major positive for import-dependent India. In the past year, oil prices have dropped about 50 per cent, helping India improve its fiscal situation and bring inflation under control.
“The enormous fall in commodity prices helps India to the top of the tree,” Jonathan Garner, head of Asia and emerging-market strategy, Morgan Stanley, told Bloomberg TV.
On Friday, the rupee strengthened against the dollar, the first time in eight sessions, while foreign investors turned net buyers after three days of heavy selling. According to provisional figures, foreign investors bought shares worth about Rs 400 crore, after pulling out about Rs 3,000 crore in the past three sessions.
Experts said the Indian market was attractive to foreign investors, as it wasn’t vulnerable to a fall in commodity prices or a slowdown in the Chinese economy. Most global markets ended the week with losses, after China’s move to devalue its currency roiled risk appetite and raised concern about the health of the world’s second-largest economy.
“Commodity prices are likely to remain volatile with a downward bias until events in China stabilise. India, by virtue of being a net commodity importer, should continue to be a beneficiary,” said Abhay Laijawala, managing director and head of research, Deutsche Bank.
He added after the recent outperformance, India’s valuation premium to the MSCI Emerging Markets Index had widened to the highest level in the past 12 years.
All Sensex components, with the exception of Infosys and Dr Reddy, ended with gains with Vedanta gaining the most at 3.7 per cent followed by ICICI Bank at 3.6 per cent. Index big weights Reliance Industries and HDFC also added around 3.5 per cent each. Getting a whiff of reform measures-which were announced by the government after market hours-- shares of state-owned banks including Punjab National Bank and Bank of Baroda sharp gains of 9 per cent and 4.5 per cent respectively. The board-based BSE Midcap index outperformed the large caps gaining 2.4 per cent. Among the sectoral indices the realty sector index gained the most at nearly 8 per cent.
"Looking at all these events and environment, I am bullish in the medium to long term," said Motilal Oswal,CMD,Motilal Oswal Financial Services.
