Led by energy stocks, stock markets on Tuesday logged their biggest gain in more than a week as the rupee reversed losses and crude oil prices dropped.
The BSE Sensex moved in a narrow range till 2 pm, but a sudden burst of buying in the last hour pushed the index higher and settled at 25,521.19, a rise of 330.71 points or 1.31 per cent.
It had plunged by 385.73 points or 1.51 per cent in the last two sessions.
The wide-based 50-issue CNX Nifty of the NSE also bounced back by 98.15 points, or 1.30 per cent, to close at 7,631.70.
The rupee gained 13 paise to 60.03 per dollar, ending a two-day losing streak. It fell as much as 0.6 per cent earlier to 60.53, the weakest level since April 20, after losing 1.5 per cent in the previous two days.
Brent crude, which had soared in the last few days due to tensions in Iraq, fell for a second day on signs violence in Iraq may not hurt the nation’s oil supply. It increased 4.4 per cent last week, the most since July.
In the afternoon US benchmark West Texas Intermediate for July delivery fell 39 cents to $106.51 a barrel in afternoon trade, while Brent crude for August declined 42 cents to $ 112.52.
Asian markets were mixed Tuesday, following a tepid lead from Wall Street ahead of a US Federal Reserve policy meeting, while oil edged down a touch from nine-month highs as traders nervously watch the crisis in Iraq.
On the domestic front, dealers said that strong buying led to 11 out of the 12 BSE sectoral indices closing with gains while only FMCG finished with minor losses. Oil and gas, banking, capital goods, power and metal indices led the gains.
Dipen Shah, head of private client group research at Kotak Securities, said, “Markets rose sharply in the final hour of trading after remaining almost flat for the most part of the day. The rise was surprising and likely a result of some fund buying in the large cap stocks. The markets had consolidated over the past couple of trading sessions.”
According to Alex Mathews, head – research, Geojit BNP Paribas Financial Services, the markets rebounded smartly in the second half on the back of bargain buying in banking and oil and gas stocks and positive global markets.
ONGC and Axis Bank, which led the gainers list, closed up around 4.43 per cent and 3.99 per cent respectively.
“Going ahead, we see the monsoon progress and the budget to be the two most important triggers for the markets. We feel that a progressive budget as well as other reform initiatives will likely lead to continued outperformance of Indian indices versus emerging market peers. However, if there is a continued rise in crude price, it will be a negative from the CAD, rupee and inflation perspective,” Shah said.