Reuters
The BSE Sensex and Nifty rose to record highs yesterday after the prospect of further policy stimulus in China and Europe whetted risk appetite globally, while expectations of more reforms during the ongoing winter session of parliament also helped.
Global shares rallied as China is ready to lower rates again after Friday’s surprise cut to shore up the cooling economy, while European Central Bank President Mario Draghi surprised by declaring his commitment to fighting deflation.
Surprise rate cuts amid other actions by global central banks to support their economies have reinforced expectations that easing consumer inflation will lead the Reserve Bank of India, whose policy review is due on December 2, to ease monetary policy earlier than expected.
Investors also remain hopeful Prime Minister Narendra Modi’s government would push for reforms such as the goods and services tax, disinvestment, and changes in land acquisition laws in the winter session of parliament that kicked off yesterday.
“The sentiments were positive from early trades, mainly driven by China’s surprise move to cut interest rates for the first time in more than two years,” said Jayant Manglik, President-retail distribution, Religare Securities Limited.
Volatility is expected though in the coming sessions due to upcoming events including expiry of November derivative contracts, Manglik added.
The Sensex closed 0.58% higher after earlier surging to an all-time high of 28,541.96. The Nifty ended up 0.62% coming off a life high of 8,534.65 hit earlier in the session.
Blue-chips lead the gains. Infosys rose 3.1% while ICICI Bank ended up 2.5%.
State Bank of India rose 1.1% while Hero MotoCorp gained 1.7%.
Metal shares surged on hopes an unexpected rate cut by China will boost demand in the sector.
Tata Steel gained 3%, Hindalco Industries rose 3.3%, while Jindal Steel and Power surged 4.2%.
Defence suppliers gained on hopes they would bag a major portion of the $2.6bn worth of mounted gun systems purchase that the government approved on Saturday. Tata Power Company gained 4.2%, Larsen & Toubro rose 0.2%, while Bharat Forge ended 3% higher.
Lupin gained 0.7% on hopes India has cleared the company’s request to raise foreign investment limit, traders said.
Kotak Mahindra Bank closed just 0.05% higher on profit-taking at higher levels after the stock rallied to all-time high on Friday on agreeing to buy ING Vysya in an all-share deal.
Among losers, Power Grid Corp of India fell 2.8% on worries index provider MSCI may exclude the stock from MSCI India index, dealers said.
Meanwhile, the rupee weakened yesterday on sustained buying of dollars by state-run banks and importers even as most other Asian currencies rallied on hopes of more foreign flows after monetary stimulus measures in China and Europe.
The sharp fall in the euro following the stimulus talks however weighed on rupee sentiment, dealers said.
The partially convertible rupee closed at 61.9350/9450 per dollar compared to 61.7625/7725 on Friday.
