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Posting its biggest single-day gain in nearly five months, the benchmark Sensex on Tuesday jumped 521 points and the Nifty crossed the 8,600-mark on strong overseas markets and expectations of positive announcements on the GST front.
The 30-share BSE Sensex resumed higher and quickly crossed the 28,000-mark to hit a high of 28,064.39 before settling at 28,050.88, a significant gain of 520.91, or 1.89 per cent, with short-covering adding to the bullishness. This was the biggest single-day gain since May 25 when it had gained 575.70 points. The NSE Nifty retook the 8,600-mark to touch a high of 8,659.80 and finally settled up 157.50 points, or 1.85 per cent, at 8,677.90.
The rupee also made a smart rebound, gaining 15 paise to end at 66.73 on fresh bout of dollar selling by exporters and banks amid weak overseas sentiment.
Bank shares hogged all the limelight with ICICI Bank zooming 4.58 per cent following the Essar Oil-Rosneft deal. Axis Bank rose 2.59 per cent, HDFC Bank 1.58 per cent while SBI gained 1.50 per cent. The mid-cap index rose by 1.89 per cent and small-cap by 1.30 per cent. The banking index topped the chart by climbing 2.37 per cent followed by capital goods 2.07 per cent, IT 1.84 per cent, metal 1.82 per cent and technology 1.68 per cent
Among other Asian markets, Hong Kong’s Hang Seng rose 1.55 per cent and Shanghai Composite by 1.40 per cent. European markets also opened on a positive note, tracking gains in Asian trading amid a slide in the US dollar ahead of US inflation data. London’s FTSE, Paris CAC 40 and Frankfurt’s DAX 30 all gained up to 1.21 per cent in their early deals.
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Analysts said a smart rally in local equities and light unwinding of long dollar positions by foreign banks mainly helped the rupee regain strength. Weakness in the dollar against other currencies overseas on unexpected fall in US manufacturing index also made the rupee stronger.
Dipen Shah, senior vice president, Kotak Securities, said, “markets rose sharply led by supportive global markets, expectations on the GST rate and bottom fishing after a fall over the past few days. The announcement of the GST rate will be an important trigger for the markets, going ahead. The US elections in November will also be an important event for the global markets. Apart from these, markets will see stock specific action coming from the quarterly results, as they will be announced over the next 4 weeks.”
“The market bounced back led by short covering on the starting day of the GST council. The market sensed a bargaining opportunity due to the correction which has happened in the last two weeks while the outcome from the event is likely to be positive,” said Vinod Nair, head of research, Geojit BNP Paribas Financial Services.
Jayant Manglik, president, Religare Securities, said: “Nifty made a remarkable comeback, thanks to upbeat domestic cues and supportive global markets. It started with an uptick but the actual momentum came in the later half, tracking noticeable recovery in index majors. The beginning of three-day GST council meet to finalise the tax rate triggered positivity, which in turn resulted in short covering across the board. Also, the recent Essar deal has raised hope among the bankers as majority of them are struggling with NPA issue.”
“No doubt, earnings hold utmost importance at present but outcome of the GST council meet could be decisive in the near term,” he said.