The BSE benchmark Sensex today zoomed by nearly 390 points, its biggest gain in seven months, to close at 18,744.93 on heavy buying by FIIs on hopes of aggressive rate cut by RBI and expectations of a lower fiscal deficit on account of falling prices of crude oil and gold.
The 30-share Sensex opened at 18,356.32 and fell to the day's low point of 18,325.73 on initial selling tracking overnight losses in US markets. However, fresh fund infusion by FIIs on talks of lower fiscal deficit and a possible 50 basis point rate cut by RBI on May 3 after lower-than-expected inflation numbers helped the sentiment recover, traders said.
Led by banks, auto, capital goods and power shares, the Sensex surged to day's high of 18,771.33 and finally settled at 18,744.93 -- a gain of 387.13 points or 2.11 per cent, the biggest jump since 403.58-point rise in September 2012.
The NSE 50-share Nifty also ended higher by 120.55 points or 2.16 per cent to finish at 5,688.95. Across the market, investor welath rose by over Rs 1 lakh crore to Rs 64.24 lakh crore as nearly 1,400 stocks rose.
"Market is seen discounting falls in gold and crude oil prices that are likely to bring down current account deficit (CAD). Also, lower-than-expected inflation has raised hopes for RBI to cut key interest rates," said Nidhi Saraswat, Senior Research Analyst, Bonanza Portfolio.
ICICI Bank, HDFC, HDFC Bank and SBI saw good buying on rate cut hopes. Similarly, Maruti Suzuki, Tata Motors, M&M, Hero Motocorp and Bajaj Auto registered smart gains.
Oil and gas related stocks like ONGC and RIL rose further after Brent crude oil fell today in London market. RIL is expected to post Q4 earnings later in the day.
Tata Power today closed 2 per cent higher after CERC allowed it to raise power tariffs to compensate for an unexpected increase in coal cost.
However, stocks of gold finance companies remained under pressure with Mannappuram Finance and Muthoot Finance dropping by nearly 10 per cent each.
