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Sensex, Nifty post best gains in 3 weeks as Fed hints low rates to stay

Indian shares posted their best gains in three weeks on Thursday, joining a global equities rally sparked by minutes of the US Federal Reserve’s last policy meeting which hinted that interest rates would remain low in the world’s largest economy. Photo: Mint Premium
Indian shares posted their best gains in three weeks on Thursday, joining a global equities rally sparked by minutes of the US Federal Reserve’s last policy meeting which hinted that interest rates would remain low in the world’s largest economy. Photo: Mint

The Sensex closed 390.49 points higher at 26,637.28, while the Nifty ended up 117.85 points at 7,960.55, highest gain since 18 September for both indices

Mumbai: Indian shares snapped a three-session losing streak and posted their best gains in three weeks on Thursday, joining a global equities rally sparked by minutes of the US Federal Reserve’s last policy meeting which hinted that interest rates would remain low in the world’s largest economy.

Minutes of the Fed’s 16-17 September meeting released late on Wednesday showed that officials were wary about the twin threats of a stronger dollar and recent concerns over the world economy as they contemplated an exit from record-low interest rates. Risk appetite shot up, driving world shares higher.

The 30-share S&P BSE Sensex closed 1.49%, or 390.49 points, higher at 26,637.28 points, while the National Stock Exchange’s broader barometer 50-share CNX Nifty climbed 1.5%, or 117.85 points, to 7,960.55 points. It was the highest gain since 18 September for both indices.

Since the beginning of this year, the Sensex has gained 25.82%, while foreign institutional investors have bought $13.90 billion from local equity markets.

“Market had corrected a lot. It was looking for a reason to recover, and Fed minutes provided that good reason" said Raamdeo Agrawal, joint managing director of Motilal Oswal Financial Services Ltd, adding that soft crude prices are a big relief.

Sensex had touched a record high on 8 September, and even after Thursday’s recovery, it is still 2.6% below that level. Crude oil trades at $92 a barrel near its 27-month lows due to rising global supplies and sluggish demand owing to economic weakness in China.

“The biggest positive is that crude price has come down drastically, and rupee has also shown some uptrend," said Devang Mehta, senior vice-president and head of equity advisory at Anand Rathi Financial Services Ltd., adding that valuations started looking attractive again for some stocks which were battered recently.

Elsewhere in Asia, Hong Kong’s Hang Seng Index and Singapore’s FTSE Straits Times Index advanced 1.2% and 1.1% respectively, while Japan’s Topix Index climbed 1.1%. In Europe, Britain’s FTSE 100 Index and France’s CAC-40 Index climbed 0.5% each, while Germany’s DAX was up 1.1%. US equities registered their best gains so far in 2014, with Dow Jones Industrial Average rising 1.% while S&P 500 Index advanced 1.8%.

The dollar index which tracks the currency against six major currencies, declined for a fourth consecutive session, and was down 0.24% at 85.09.

On the domestic front, all eyes will now be set on the impending quarterly earnings announcements.

Estimates of net profit growth for the 30 Sensex companies in second quarter of FY15 range from 8% to 10%, based on brokerage estimates released ahead of the earnings season.

Infosys Ltd, which is set to kick off the earnings season with quarterly results on Friday, closed 0.13% lower at 3,645.55.

The second-largest software services exporter is expected to post a 2.5-4.4% dollar revenue growth in the September quarter over the year-ago period, according to Bloomberg estimates. The company is also expected to maintain its full-year revenue guidance of 7-9%.

All sectoral indices gained, with the S&P BSE Capital Goods index rising 3%. S&P BSE Realty index and S&P BSE Bankex index advanced 2.6% and 2.5%, respectively.

State-run Bharat Heavy Electricals Ltd (Bhel) gained 8.4% to 218.85 after it bagged a 7,800 crore order to set up a thermal power unit. Top lender State Bank of India (SBI) gained 2.8% to 2,480.25 .

Hindalco Industries Ltd rose 6.1% to 157.75 on hopes of strong quarterly results, after its global rival Alcoa Inc. posted better-than expected earnings in the September quarter.

Among losers, Wipro Ltd fell 0.8% to 588.05, Mahindra and Mahindra Ltd (M&M) shed 0.4% to 1,367.5, while NTPC Ltd declined 0.5% to 143.05.

Reuters contributed to this story.

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