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Global markets and currencies Thursday staged a comeback after the US and Iran appeared to be backing off from a wider military conflict. The Sensex rallied 635 points while the Nifty reclaimed the 12,000-mark as investors came back with renewed fervour amid expectations of more reforms to bring the economy back on the rails. The rupee gained 48 paise to close at 71.21 against the US dollar, as sentiment turned buoyant in the currency market.
The BSE Sensex opened on a strong note and maintained its momentum throughout the day, finally closing at 41,452.35, up 634.61 points, or 1.55 per cent. Similarly, the NSE Nifty rose 190.55 points, or 1.58 per cent, to 12,215.90. Vinod Nair, head of research, Geojit Financial Services, said, “Expectation for initiatives to bring growth in the upcoming Budget and easing tensions in the Middle East seems to cheer investors. Government is poised to bring initiatives and policy measures to support economic growth to benefit equities for long term.”
Investors’ wealth rose by Rs 2.25 lakh crore to Rs 157 lakh crore in the buying euphoria. On January 6, the Sensex plunged 787.98 points, the biggest single-day drop since July 8, to 40,676.63.
Analysts said equities gained after US President Donald Trump said the US is “ready to embrace peace with all who seek it”, a day after Iran fired rockets at American military bases in Iraq in response to the killing of top Iranian general Qassem Soleimani. Reports said there were no US or Iraqi casualties in the Iran strike.
Expectation for initiatives to bring growth in the upcoming Budget and easing of tensions in West Asia seem to have cheered investors. The Centre is poised to bring initiatives and policy measures to support growth to benefit equities for long term. Meanwhile, the short-term market trend will be driven by events like Q3 results, which are expected to show some improvement due to low base.
The risk sentiment received a further boost after China said its Vice Premier Liu He will visit Washington next week for the signing of the much-awaited interim trade deal with the US.
According to Ajit Mishra, VP—research, Religare Broking, it turned out to be a phenomenal day for equity markets as the benchmark rose over one-and-a-half per cent and settled around the day’s high. Investors are expecting several steps for revival of the economy in the upcoming Budget. Prime Minister Narendra Modi Thursday held discussions on the state of the economy with economists, experts and entrepreneurs at the NITI Aayog, and promised steps to revive growth.
In the Sensex pack, ICICI Bank rose 3.80 per cent, followed by SBI, M&M, IndusInd Bank, Maruti Suzuki, Asian Paints and Reliance Industries. Among sectoral indices, realty, auto, bankex, industrials, finance and energy rallied up to 2.83 per cent, while IT ended in the red. The broader BSE midcap and smallcap indices surged up to 1.55 per cent. Bourses in Shanghai, Hong Kong, Tokyo and Seoul ended up to 2.31 per cent higher. European markets also started with significant gains amid easing US-Iran tensions.
