Snapping the three-day losing string, the BSE Sensex on Thursday surged by 351 points following good quarterly results by technology companies and a rally in banking shares led by ICICI Bank.
The rally was supported by expectations of a turnaround in the domestic economy and on hopes that a stable government with comfortable majority would come to power.
The 30-share BSE Sensex opened strong and gradually improved further to settle the day at 22,628.84, a rise 1.58 per cent from its previous close. The gain comes after the index tumbled by 438.10 points or 1.93 per cent in the previous three days.
The 50-issue CNX Nifty of the NSE also bounced back by 104.10 points or 1.56 per cent to 6,779.40, within the striking distance of crucial 6,800-mark.
“Equity markets made an amazing comeback. Janet Yellen’s comment to not worry too much about interest rates helped global market rally, which followed in domestic markets as well,” said Rakesh Tarway, V-P and head of Equity Strategy and Derivative, Motilal Oswal Securities.
“This gain erased the losses suffered earlier in the week. We believe that the markets continue to be driven by expectations of a favourable outcome of the elections, with valuations now at above the long term average for the benchmarks. Early implementation of important domestic reforms is needed for markets to sustain and move up from current levels,” said Dipen Shah, head- Private Client Group Research, Kotak Securities.
In spite of the long weekend ahead, investors opted to use Wednesday’s dip as a buying opportunity. “FIIs who were on the sidelines over the last few sessions, may be awaiting ground inputs from latest phase of polling. Whereas new domestic money has started to trade aggressively.
The short-term market move will depend on the ground reality from election i.e. whether BJP continues to gain further ground market can touch new highs,” said Vinod Nair, head-Fundamental Research, Geojit BNP Paribas Financial.
The market also took note of the comments of Standard & Poor’s. S&P said it may upgrade India’s outlook if the government that is elected next month addresses some of the country’s fiscal and economic challenges through steps such as passing a goods and services tax.
“If in the future they implement policies that effectively addresses some of the credit weaknesses that I have highlighted, we could revise the outlook to stable again,” said S&P senior director Kim Eng Tan in a webcast.