US Fed stimulus,China reform agenda drive Sensex up 451 points

Biggest monthly gain since October; R strengthens 70 paise to close at 62.41 to $.

Written by ENS Economic Bureau | Mumbai | Published:November 19, 2013 3:01 am

Buoyed by the prospect of extended stimulus in the US and real economic reform in China,the Sensex surged by 451 points on Monday,its biggest single-day gain in a month.

The Sensex opened 171 points higher and stayed in positive territory through the day and ended at an almost two-week high of 20,850.74,a rise of 2.21 per cent. It was the biggest gain since October 18. The 70-paise gain in the rupee to 62.41 against the dollar also boosted market sentiment.

Sanjeev Zarbade,vice president,Kotak Securities,said,“Coming on the back of a rally on Thursday,the Indian markets continued to trade firm supported by global cues. That the US stimulus measures (QE3) may not be rolled back any time soon is what is driving the risk on rally in equity markets. Implied in this expectation is that foreign capital flows would continue.”

The rally came on a day UBS downgraded India to “neutral” from “overweight” and upgraded China to “overweight”,saying Plenum reforms will likely cause China to outperform Asia ex-Japan for the next few months.

International rating agency Moody’s too maintained its negative outlook on the country’s banking sector,citing worries over asset quality and growth prospects. “The negative outlook reflects our views that economic growth will be weak,banks’ asset quality will deteriorate,” it said.

Dow,S&P 500 hits new highs

NEW YORK: Benchmark US stock indices rose to record highs on Monday,buoyed by the prospect of continued Federal Reserve stimulus,while the dollar slipped and global equity markets climbed,driven by economic reform plans in China.

The Dow and S&P 500 surged past the 16,000 and 1,800 milestones,respectively,but both US indices pared some gains soon after markets opened.

Round numbers often act as resistance points for chartists,but clearing them can also provide momentum for investors eager to chase performance.

The Dow Jones industrial average was up 47.76 points,or 0.30 per cent,at 16,009.46. The Standard & Poor’s 500 Index was up 0.99 points,or 0.06 per cent,at 1,799.17. The Nasdaq Composite Index was down 2.95 points,or 0.07 per cent,at 3,983.02 at 1:00 pm EST.

Gold fell as a rebound in equities and lacklustre physical demand prompted traders to cash in three days’ of gains,though expectations the Fed’s policy will stay loose lent support. Reuters

Polls could be big swing factor for markets: HSBC

New Delhi: The general elections could prove to be a “big swing factor” for the Indian stock market going ahead,financial services major HSBC said while putting a Sensex target of 21,750 for end-2014.

According to HSBC,the “storm has abated” for the Indian markets as the US Fed has deferred tapering of its quantitative easing stimulus,and as RBI Governor Raghuram Rajan has taken steps to contain the rupee fall.

“We expect Indian equities to deliver a below average return of 3 per cent in 2014,while earnings should grow by 8-10 per cent,” the report said. PTI

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