Global rebound, banking rally give Sensex a 265point boost

MUMBAI: Indian equities rallied on Thursday, extending a surprising global recovery as Donald Trump’s conciliatory acceptance speech comments helped soothe world financial markets spooked by his unexpected US election victory.

The Sensex ended at 27,517.68, a gain of 265.15 points, or 0.97%, after rising 467 points intra-day. The index had dropped 338.61 points on Wednesday.

The Nifty gained 93.75 points, or 1.11%, to end at 8,525.75, after trading between 8,598.45 and 8,510.70 during the day.

Meanwhile, foreign portfolio investors sold shares worth ₹2,095 crore on Wednesday, according to provisional data.

“The surprising US election outcome has come as a one-time obstacle as the ‘BREXIT’ referendum... The market moved ahead keeping aside the notional excitement. Some caution can be expected in the near-term. Midcaps and banks can continue to rally since prices are still cheaper and benefit from demonetisation,” said Vinod Nair, research head, Geojit BNP Paribas Financial Services Ltd.

Among the sector indices, the BSE bankex gained 12% in anticipation that the government’s move to demonetise ₹500 and ₹1,000 notes will boost their current account and savings account (CASA) ratio. Shares of PNB zoomed 11.86%, Bank of Baroda surged 9.03% and SBI soared 8.41% on the BSE. Bank of Maharashtra (up 9.52%), Allahabad Bank (up 8.25%), Canara Bank (up 6.74%) and Yes Bank (up 5.86%) were among the other gainers.

“The banking sector is expected to benefit as more money will flow into the formal sector. We expect banks to benefit in terms of more deposits, especially low cost deposits. However, in the near term, banks may witness higher stress on assets in the real estate sector,” said Kamlesh Rao, CEO, Kotak Securities.

Hectic short-covering and value-buying were the order of day, and equities were also supported by quarterly earnings released by key companies.

REUTERS & PTI