Sensex, Nifty surge 1.9% as banks rally
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Mumbai: Indian shares climbed on Tuesday rebounding from their earlier decline as traders covered short positions and Asian markets rose. Both the benchmark equity indices, the Sensex and Nifty, jumped 1.9% each, the maximum daily gains in at least five months.
Financial and industry stocks led the rally.
The BSE’s 30-share Sensex closed 1.89% or 520.91 points higher at 28,050.88, while the National Stock Exchange’s (NSE) 50-share Nifty climbed 1.85% or 157.50 points to 8,677.90.
“A pullback in US dollar whetted global risk appetite, sparking rallies in currencies, commodities, and global equity markets.” said Anand James, chief market strategist, Geojit BNP Paribas Financial Services Ltd.
Stocks rallied amid continuing deliberations on the goods and services tax (GST). Over the next three days, deliberations of the GST Council, most of which are expected to be contentious, will determine whether the country can stick to the 1 April deadline for the roll-out of the tax.
All sectoral indices closed in the green. The BSE Finance index and the BSE Bankex led gains among sectoral indices with a 2.55% and a 2.4% rise, respectively.
“There is continued optimism on the banking side that the non-performing asset issue will get resolved after Essar Rosneft deal,” said Dipen Shah, head of private client group research at Kotak Securities Ltd. “Apart from this, we expect that the earnings seasons will be better as compared to previous quarter.”
Last week, the Essar Group inked a deal to sell its oil unit and other assets to a PJSC Rosneft-led group for $13 billion culminating in what will be India’s largest debt reduction exercise.
Twenty-eight of 30 Sensex stocks closed higher. Adani Ports and Special Economic Zone Ltd jumped 6.3%, the maximum gain in two months. ICICI Bank Ltd climbed 4.6% to Rs270.40 a share, a level last seen on 23 September. The stock gained for three straight sessions and rose over 12.11% during this period.
Separately, on the global front, the next important point for the markets will be Chinese economic data on industrial production, retail sales and gross domestic product that are all due on Wednesday after a report last week showed the country’s exports unexpectedly dropped in September.
Asian markets closed in the green after days of consolidation as markets seemed set to bounce back from oversold territory.
The Nikkei index closed 0.4% higher, Hang Seng rose 1.6% while Shanghai rose 1.4%. Among European markets, FTSE 100 Index rose 1.2%, CAC 40 rose 1.2% while Dax climbed 1.3%.
Provisional data from NSE suggested foreign institutional investors (FIIs) bought a net of Rs345.04 crore on Tuesday, while domestic institutional investors (DIIs) bought a net of Rs173.36 crore of local shares.
Year to date, FIIs have been net buyers of $7.42 billion of shares, while DIIs have pumped in a net of more than Rs4,024 crore in domestic equities.
“Today’s rally can be attributed to a slew of factors. At home, our macros are in good shape. Secondly, with the Essar deal, corporate de-leveraging has begun, boosting the performance of banking stocks. Globally cues were also supportive, especially the developments on China’s economy. So, we expect this rally to have more legs and will be led mainly by banks, financials and metals,” said Sanjiv Bhasin, executive vice-president, markets and corporate affairs, India Infoline.
Bloomberg, Reuters and Mint’s Harsha Jethmalani contributed to this story.