Chinese investment pledge, US Fed fuel rally

Previously, it had zoomed 556.77 points or 2.42 per cent on May 12.

China’s offer to make mega investments in India and the US decision to hold interest rates excited the domestic stock market with the benchmark Sensex rallying the most in nearly four months.

Riding on expectations of more foreign inflows and higher economic growth, the BSE Sensex which resumed lower quickly rebounded in line with positive Asian trends to cross the 27,000-mark and hit a high of 27,132.20, before settling at 27,112.21, a rise of 480.92 points or 1.81 per cent.

Previously, it had zoomed 556.77 points or 2.42 per cent on May 12. Similarly, the 50-share NSE Nifty regained the 8,100 level and touched the day’s high of 8,120.85 before settling 139.25 points higher at 8,114.75. Devang Mehta, senior VP and head – equity advisory, Anand Rathi Financial Services said, “Participants were truly excited by the prospects of huge investments by China in India’s infrastructure, railway and manufacturing projects.”

Also, the threat of an immediate outflow of funds disappeared after the US Fed meet. “With the US rate rise possibilities becoming a more distant reality, emerging economies including India can expect to keep their hot monies ‘hot’ for some more time,” said Debopam Chaudhuri, chief economist, ZyFin Research. The Volatility Index — India VIX — stood at 12.3250 down around 4.80 per cent, indicating that foreign investors are not panicking and they want to stay invested for the long term.