Posting the biggest single-day percentage gain in nearly seven weeks, the BSE benchmark Sensex on Thursday jumped by 359 points, tracking higher Asian markets on bets that the US Federal Reserve would raise rates in December but proceed cautiously on more tightening. The government’s announcement on Coal India stake sale, IPO plan for Cochin Shipyard and interest subsidy scheme for exporters also boosted the sentiment.
The rupee recovered by 12 paise to close at 66.18 per dollar on fresh selling of greenback by banks and exporters. Asian stocks and emerging market currencies rallied Thursday after minutes from the Federal Reserve showed growing confidence in the US economy, ramping up the chances of a December interest rate hike.
The 30-share Sensex ended up by 359.40 points, or 1.41 per cent, at 25,841.92 — its biggest single-day gain since October 5. The gauge had lost 381.95 points in the previous session. The broad-based NSE Nifty reclaimed the 7,800-level before settling at 7,842.75, up 110.95 points, or 1.43 per cent.
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“Most participants” at the US central bank’s October policy expected conditions to be right by their next meeting, having broadly dropped their worries about the global economy and recent market turmoil, the Fed minutes said. Fed chief Janet Yellen had said earlier in the year she expected an increase by 2016 but a hike was put off several times during the summer as world markets were hammered by worries about China and the global outlook. Delaying a rise “could increase uncertainty in financial markets and unduly magnify the perceived importance of the beginning of the policy normalisation process,” the minutes said.
There was more good news in store as the government as part of its efforts to revive exports yesterday announced a 3 per cent interest subsidy scheme for exporters running for 5 years.
“The government’s intention to push reforms just before the start of the winter session of Parliament is being taken positively by the market,” said Vinod Nair, head-fundamental research, Geojit BNP Paribas Financial Services. “Additionally, the FOMC minutes appear to indicate that the US rate hike will only be a gradual increase, which is positive for EMs since they are already under pressure due to FII outflow.”
Dr Reddy’s falls further, down 25% from 52-week high
Mumbai: Shares of Dr Reddy’s on Thursday fell by 7 per cent before closing down by nearly 3 per cent on the BSE as a US law firm filed a class-action suit against the drug company. The market capitalisation of the firm eroded by Rs 1,515 crore to Rs 56,069.03 crore. With this, the scrip is down 25 per cent from the 52 week high level of Rs 4,382. ENS