Bulls are back in the game as the possibility of a decline in interest rate increased. After a gap of over six months,the BSE Sensex shot past the 18,000 points mark on capital inflows and investor hopes that falling inflation will prompt the Reserve Bank of India to ease the tight monetary policy stance.
With falling inflation bolstering appetite for shares in interest rate sensitive sectors such as banks,automobiles and infrastructure,the Sensex opened at the 18,000 level and continued to gain throughout the day,and closed at a six-month high of 18,202.41,up 353.84 points or 1.98 per cent. It had ended at 18,314.33 on August 1. The NSE 50-scrip index Nifty regained the 5,500 mark by jumping 115.90 points,or 2.14 per cent to 5,531.95.
Foreign funds,which have been picking up equities since the start of this year,bought shares worth Rs 1,838 crore on Wednesday as per provisional data with stock exchanges. They have pumped in over Rs 22,000 crore (over $4.3 billion) till February 15 this year. Besides,equity markets across Asia and Europe were firm on hopes of a resolution to the Greek debt trouble. Strong third quarter earnings posted by the countrys largest auto firm Tata Motors bolstered investor sentiment.
The top gainer on Wednesday was Tata Motors,which rose 6.9 per cent to close at its life high of 286.40. The company reported a better-than-expected 40.5 percent rise in December quarter net profit on Monday. As far as India is concerned,the good news is that inflation has cooled off in January,giving elbow room to the RBI to ease its hawkish monetary policy further and support growth. But,overall world equity markets are showing some signs of fatigue this month after a surprisingly strong January. Corporate results have been mixed in the backdrop of a slowing economy, said Amar Ambani,Head of Research,IIFL.
Interest-sensitive stocks in the realty,banking and auto sectors attracted strong buying,helping markets make gains for the third day in a row. Capital goods,power and consumer durables supported the market.