Sensex posts big gain, ` weakens

Mumbai: Markets saw a big pullback rally on Tuesday, with the Sensex logging its biggest single-day gain of over 406 points in nearly three weeks and gold rebounding from an 11month low, but the rupee weakened to breach the 68-mark against the dollar. The rally helped the broader Nifty get past the psychological 8,000 level.

The equity markets bounced back sharply on Tuesday amidst a strong rally in index heavyweights after finance minister Arun Jaitley said India now needs lower levels of tax rates to make it globally competitive. The Sensex vaulted 406.34 points or 1.57 per cent while the Nifty ended the day at 8,032.85, gaining 124.60 points or 1.58 per cent.

“The buying sentiment improved after there was an indication from the finance minister Arun Jaitley to lower the indirect tax rates in next year’s budget which will increase competitiveness of the country in the global markets. Considering that consumption has slowed down in the country, the market is also expecting government to cut direct tax rates in next year’s budget which will be beneficial for the consumption related stocks,” said Vaibhav Agrawal, head of research at Angel Broking.

The finance minister’s comments, which buoyed investors sentiment forced traders to cover their short positions ahead of the expiry of the December derivative series.

According to the provisional data released by the stock exchanges, foreign portfolio investors remained net sellers to the tune of `712 crore. India’s volatility index, which measures investors expectation about the near term volatility dropped 9.16 per cent on the National Stock Exchange.