Sensex jumps 216 pts on govt wage hike, global cues; auto, retail surge

The broader markets marginally outperformed benchmarks as the BSE Midcap index rose 0.98 per cent and Smallcap rallied 1.31 per cent. The government’s move to clear the Model Shop & Establishment Act also boosted the sentiment. The rupee gained 27 paise to close at 67.68 against the US currency on dollar selling by banks and exporters amid firm stock markets.

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Jayant Manglik, president, Religare Securities, said, “Firm global cues triggered a gap up start which further strengthened in response to the RBI’s latest Financial Stability Report (FSR) which stated stable financial system despite global uncertainty and prevailing banking sector issues. However, the real booster was the Cabinet approval to the 7th Pay Commission recommendations, which fuelled fresh buying in index and stocks across the board.” According to Shreyash Devalkar, fund manager, BNP Paribas Mutual Fund, “Domestic and global stock markets rose on speculation that central banks will resort to additional monetary stimulus in an effort to counter the potential drag on global economy arising from the UK’s decision to leave the EU.”

With the exception of the FMCG index, all other sectoral indices on the National Stock Exchange traded in the green with media, IT, auto and metals indices registering gains of more than one per cent.

Auto and consumer durables stocks gained up to 4 per cent on expectation of a spike in their sales following the Cabinet’s approval to the 7th Pay Commission recommendations. From the auto basket, shares of Hero MotoCorp rose by 3.95 per cent, while Tata Motors (1.53 per cent), Maruti Suzuki India (1.36 per cent), Bajaj Auto (0.71 per cent) and Mahindra & Mahindra (0.62 per cent) also gained on the BSE.

Shares of firms engaged in retail and entertainment sector rose sharply by up to 10 per cent on Wednesday after a model law that allows shops, malls and cinema halls, among other establishments, to run 24×7 throughout the year received Cabinet assent. Departmental store operators Future Market Networks and Store One Retail jumped 10 per cent and 9.97 per cent, respectively. Provogue (India) soared 9.83 per cent, Future Enterprises climbed 5.45 per cent, Shoppers Stop surged 5.19 per cent, V2 Retail (4.96 per cent) and Trent (1.13 per cent) on the BSE.