Stock markets on Tuesday rallied by 1.70 per cent in a volatile session aided by global cues and optimism about Prime Minister Narendra Modi’s meeting with representatives of corporate India on kickstarting investments and growth. A late surge in Chinese equities aided the benchmark BSE Sensex to soar by 424 points and close above the psychological 25,000-level.
The rupee also recovered by 27 paise to close at 66.55 against the US dollar on fresh selling of the American currency by banks and exporters.
The meeting of the Prime Minister with industry captains, bankers and economists to discuss ways and means to support the economy amid a global slowdown boosted market sentiments. There was also speculation that the Reserve Bank of India (RBI) may dilute its proposed guidelines on base rates which, in turn, sent bank stocks soaring.
Dipen Shah, head of private client group research, Kotak Securities, said: “Markets broke its losing streak and closed about 1.7 per cent higher. Markets rose likely on the back of stable global markets and optimism about further steps by the Government to revive the economy. Later in the day, some short-covering also helped the markets sustain gains. We await further action on fiscal reforms, amid the uncertainty created by the Chinese economy and the potential US interest rate hike.”
“The government’s meeting with corporate leaders acknowledging global concerns that are impacting India has calmed the market,” Vinod Nair, head-fundamental research at Geojit BNP Paribas Financial Services. Financial stocks took the centre-stage as speculation whirred around the possibility of the RBI going for a dilution of its proposed rules on base rates. After the 870-point fall in the last two days, the 30-share barometer bounced back in afternoon deals and surged to the day’s high of 25,411 before ending at 25,317.87, a solid gain of 424.06 points, or 1.70 per cent. The gauge had lost 870.97 points in the past two trading sessions in large measure due to worries on China and rain deficit.
The 50-issue National Stock Exchange Nifty reclaimed the 7,700-mark for a while before finally settling higher by 129.45 points, or 1.71 per cent, at 7,688.25.
The banking index was the toast of the town as it jumped a neat 3.61 per cent even as power, capital goods, realty and metal rallied too. The BSE mid-cap index recovered 1.02 per cent and the small-cap 0.60 per cent.
Among overseas markets, China’s Shanghai Composite, which had been on a sticky wicket of late, ended 2.92 per cent higher while Hong Kong’s Hang Seng surged 3.28 per cent. However, Japan’s Nikkei shed 2.43 per cent. Chinese stocks edged higher in a volatile trade after
Beijing introduced fresh measures — income tax cuts and a proposed circuit breaker — to discourage short-term speculation and stem a further slide in share prices.
European shares surged after the latest data showed German exports and imports rose to their highest level in July. Premier indices in France, Germany and the UK rose up to 2.04 per cent.