Sensex surges 451 points on Fed, China boost

 

The Sensex on Monday gained 451 points, or 2.2%, the most in a month, as overseas stocks advanced on China’s proposed economic reforms that would be market-friendly and expectations that the US would extend its cheap-money stimulus programme to sustain growth.

The 30-share index ended at an almost two-week high of 20,851, and the rally added more than Rs. 1,00,000 crore in investor wealth.

The NSE’s 50-share Nifty also rose 133 points, or 2.2%, to 6,189.

Shares rose worldwide, boosted by signs of ambitious economic reform in China and assurances from Fed chief nominee Janet Yellen that the $85-billion monthly bond buying programme would continue, raising hopes of higher capital inflows in India and other emerging markets.

With more foreign exchange inflows expected, the rupee notched up its biggest single-day gain in nearly seven weeks, and ended 70 paise up at 62.41 against the US dollar. That also supported equities.

“While the Quantitative Easing (QE) taper is an eventuality, recent comments from Yellen indicating that the stimulus needs to continue longer has receded fears of an early taper in light of stronger than anticipated data last week,” said Harsha Upadhyaya, chief investment officer, equity, Kotak Mutual Fund.

Of the 30 Sensex shares, 26 advanced, led by HDFC Bank (up 4.2%), Larsen & Toubro (up 3.9%), ITC (up 3.6%), Hindalco Industries (up 3.3%) and ONGC (up 3.2%).

Among the sectoral indices, capital goods rose 3.2%, followed by banks (up 3.2%), FMCG (up 2.5%) and realty (up 2.4%).

The market breadth remained positive on the BSE as 1,449 stocks gained, while 1,085 fell and 132 ruled steady.

The BSE mid-cap index gained 1.2% while the small-cap index rose 1%.

Going forward, the general elections could prove to be a “big swing factor” for the Indian markets, financial services major HSBC said, while putting a Sensex target of 21,750 for 2014-end.

“We prefer to play the market via export-oriented sectors such as infotech and healthcarewhich benefit from a weak rupee, or dollar proxy plays, such as energy,” the HSBC report said.

 

anand maurya

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