The market rallied about one per cent on Wednesday, led by banking stocks on hope that the central bank might ease interest rates, after consumer inflation declined to a four-month low. The sentiment also improved after the global bond markets stabilised. The benchmark BSE Sensex rose 373.6 points, or 1.4 per cent, to 27,251.1, while the 50-share National Stock Exchange Nifty gained 1.3 per cent, or 108.5 points, to end at 8,235.45. Both the indices had corrected more than two per cent on Tuesday.
Board-based buying was seen on Wednesday, with nearly two shares advancing for every declining and the small-cap and mid-cap indices outperforming the blue chip-led benchmarks.
Consumer Price Index (CPI) inflation (CPI) rose 4.87 per cent year-on-year in April, slowest increase since December 2014. “The latest CPI trajectory provides scope to cut rates at the next RBI meet on June 2. This could provide support to the market,” said Vinod Nair, head-fundamental research, Geojit BNP Paribas Financial Services.
The BSE Bankex rose 2.64 per cent, with Axis Bank gaining five per cent, while ICICI Bank and State Bank of India added nearly three per cent each.
“Concerns over the high bond yields in the US and Germany and uncertainty over Greece played on the sentiment of the markets. Bargain hunting at lower levels resulted in gains for the day,” said Dipen Shah, head of private client group research, Kotak Securities.
