Sensex jumps 457 pts on global market rally

Removal of incremental CRR of 100% boosts sentiment

BIGGEST SINGLE-DAY GAIN IN OVER 6 WEEKS

JOINING A global recovery, the Sensex on Thursday rallied by 457 points — its biggest singleday gain in over six weeks — fuelled by hopes that the European Central Bank (ECB) would extend its stimulus package. The Reserve Bank’s decision to remove the incremental cash reserve ratio (CRR) of 100 per cent from December 10 and expectations of a cut in lending rates by banks cheered the sentiment further.

The 30-share benchmark index stayed in the green throughout to hit the day’s high of 26,733.87 following all-round buying. It ended at 26,694.28, up 457.41 points, or 1.74 per cent — its biggest single-day gain since October 18 when it had rallied 520.91 points. This is the highest closing since November 11. The index had lost 156 points in the previous session following the Reserve Bank’s decision to hold interest rates that caught the market by surprise.

The broader NSE Nifty soared 144.80 points, or 1.79 per cent, to close the day at 8,246.85 after shuttling between 8,256.25 and 8,151.75. The rupee ended near a one-month high of 67.36, rising 27 paise against the US currency due to continuous dollar selling from exporters and banks. Asian stocks also edged higher on expectations that the ECB extend its asset buying campaign at a policy meeting later in the session. Japan’s Nikkei climbed 1.45 per cent, Hong Kong’s Hang Seng surged 0.27 per cent, while China’s Shanghai Composite Index fell 0.21 per cent.

Financial stocks were among prominent gainers after RBI’S CRR decision. SBI, HDFC Bank, ICICI Bank and Axis Bank advanced by up to 1.72 per cent. Tata Steel climbed 4.62 per cent to Rs 431.55 after the company committed to a 1-year investment plan for the UK. Tata Motors, Adani Ports, Hero Motocorp, Bajaj Auto and ITC too gained. On the sectoral front, metal zoomed 2.93 per cent, followed by auto 2.63 per cent, infrastructure 1.87 per cent, technology 1.56 per cent and banking 1.54 per cent. Broader markets such as the BSE mid-cap and small-cap rose 1.49 per cent and 1.28 per cent, respectively.

Vinod Nair, head of Research, Geojit BNP Paribas Financial, said, “We feel that today’s sharp positive reaction is unlikely to sustain in the near-term. Today’s strong bounce back is due to the underperformance of India compared to the rest of the world in the recent times and short covering post Wednesday’s negative RBI action. Global markets continue to outperform assuming that the Fed rate hike is already discounted. A positive stance on CRR and outcome of ECB meet with an extension in stimulus measures are providing support to the market.”

According to an analyst, Wednesday’s fall led to bargain hunting and put the RBI rate event behind, pushing indices to a five-day peak. “Global markets were also supportive on improved prospects for Italian banks’ bailout. However, the rally fizzled out as markets turned tentative ahead of ECB meet. With the US Federal Open Market Committee’s (FOMC) much-awaited rate setting meeting also scheduled for next week, the next few days are poised to see substantial moves across global asset classes,” he said.

In the foreign exchange market, strong gains in the local equities and subdued dollar trend against other Asian currencies further boosted the rupee. Unwinding of long dollar positions by speculative traders in the face of good capital inflows also weighed on the sentiment.

Rupee ended near a month high of 67.36, rising 27 paise against the US currency due to dollar selling from exporters and banks