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On Thursday, Indian markets rose about 1.5 per cent, snapping three days o
f losses, after the US Federal Reserve said it remained committed to supporting an economic recovery. The US central bank's comments, coupled with hopes of a rating upgrade, infused optimism and ended a three-day selling spree by foreign institutional investors (FIIs).
The benchmark Sensex gained 351.6 points, or 1.58 per cent, at 22,628.84; all but one of its components gained. The 50-share Nifty, meanwhile, closed at 6,779.40, up 104.10, or 1.56 per cent, the most since March 7.
Banking and automobile stocks rallied on hopes of an economic turnaround after a new government took charge at the Centre. Most market players are hopeful the Bharatiya Janata Party (BJP), consider to be the business-friendly, will come to power. "India's recent outperformance was driven not only by the improvement in macro data points, but also by political hope, as recent opinion polls predict a strong performance by the BJP in the ongoing national elections," Manishi Raychaudhuri, Asia equity strategist at BNP Paribas, said in a client note. (STIMULUS TALK SPREADS CHEER)
Global ratings agency Standard & Poor's on Thursday said it might upgrade its outlook on India if the next government addressed some of the country's fiscal and economic challenges.
According to provisional figures, FIIs bought shares worth Rs 433 crore on Thursday, ending three days of selling, during which they had offloaded shares worth about Rs 600 crore. So far this year, FIIs have invested about $4.7 billion in Indian equities.
"After falling for three consecutive trading sessions in a short week, Indian equity markets made an amazing comeback. All-round buying saw the Nifty again reach striking distance of the 6,800-mark... Janet Yellen (US Federal Reserve chief)'s comment not to worry too much about interest rates helped the global market rally, and this extended to domestic markets as well," said Rakesh Tarway, head of equity strategy at Motilal Oswal Securities.
Indian markets were shut on Monday. They will be closed on Friday, too.
On Thursday, the positive investor sentiment was widespread, with all BSE sectoral indices ending with gains. The gains seen by the small- and mid-cap indices were in line with those of the benchmark indices.
Shares of Tata Motors, ICICI Bank, Hindalco and Axis Bank were among the major Sensex gainers.
"Bank stocks have risen sharply on improving macro conditions and hopes of a new reformist government. However, we believe long-term benefits from a pick-up in the economic cycle and an improvement in asset quality are yet to play out," Punit Srivastava, executive director (banking & finance), Daiwa Capital Markets, said in a note.
