The benchmark BSE Sensex rallied 453 points on Thursday to close above 39,000 on all-round buying support after global investors cheered the Brexit deal reached between Britain and the EU and Finance Minister Nirmala Sitharaman hinting at more stimulus measures to revive the economy.
After opening on a subdued note, the 30-share Sensex surged in afternoon trade to close at 39,052.06, up 453.07 points, or 1.17 per cent. The broader NSE Nifty, too, spiked 122.35 points, or 1.07 per cent, to settle at 11,586.35.
The rupee also rose 27 paise to close at 71.16 against the US dollar amid optimism over the Brexit deal and softening crude oil prices. Persistent foreign fund inflows and robust buying in domestic equity markets added to the momentum, forex traders said.
According to traders, domestic market followed European equities that rallied after Britain and the European Union said they have struck an outline Brexit deal after prolonged negotiations. The deal, however, must still be formally approved by the bloc and ratified by the European and UK parliaments. Further, the government’s intention to provide further fiscal stimulus in the future as per the needs of the economy also lifted the market sentiment. “Easing trade tension and positive development on Brexit provided further boost to the market. Risk taking ability is improving in the market with optimism over recovery in the economy led by stimulus, festive demand, good monsoon and lower interest rate,” said an analyst.
Yes Bank was the biggest gainer in the Sensex pack, soaring 15.19 per cent. Tata Motors rose 9.82 per cent. IndusInd Bank, SBI, Bajaj Auto, Asian Paints, Axis Bank, Tata Steel and Maruti rose up to 9.82 per cent. Sectorally, BSE auto, bankex, finance, energy, FMCG, metal, healthcare and power index rose up to 2.93 per cent. The broader BSE midcap and smallcap indices gained up to 1.77 per cent.
VK Vijaykumar, chief investment strategist, Geojit Financial Services, said, “Two major concerns for the global economy have been the trade skirmishes between the US and China and a ‘no deal Brexit.’ Early indications are that a Brexit deal has been done. This augurs well for the global economy. If the US- China trade deal also happens that will be very good news for the global economy. Since markets are over-sold this can lift spirits in the market.”
Good news, but eye now on trade deal between US & China
Two major concerns for the global economy and India have been the trade skirmishes between the US and China and question marks over the Brexit deal. The Brexit deal moving a step forward is good news, but it is hanging in balance as the ball is now in the British Parliament’s court. If the US- China trade deal happens, that will be another positive for the Indian and global economies.
“Britain and the EU have finally struck an outline Brexit deal after days of intense negotiations though it must still be formally approved by the bloc and ratified by the European and UK parliaments. With Brexit deal approved and hopes of the US and China reaching close to partial negotiation, market sentiments have turned positive,” said Siddharth Khemka, head-retail research, Motilal Oswal Financial Services.
On the domestic side, Finance Minister Nirmala Sithraman said more reforms are on the cards which would help in reviving the economic growth. Even FIIs have been net buyers for the fifth straight session. Thus given the positive development on both global and domestic fronts, along with decent earnings season so far, market sentiments should remain buoyant in near term, analysts said.
“We had a flat opening despite most of the Asian bourses trading in a positive terrain. We consolidated throughout the first half before we could breakout from intraday hurdles as we stepped into a second half. The way broader market was buzzing, it looked like as if it is sensing some positive development,” said Sameet Chavan, chief analyst, Angel Broking.
Internationally, London’s benchmark FTSE index jumped 0.61 per cent as the pound slid but the broad-market pan-European STOXX 600 lost most of its gains, rising 0.17 per cent. The FTSEurofirst index of leading regional shares rose 0.17 per cent. UK Gilts, German Bunds, gold and most other safe havens also rebounded after selling off.
At Mid-day, the Dow Jones Industrial Average was up 48 points, or 0.18 per cent, to 27,049.98. The S&P 500 gained 10.07 points, or 0.34 per cent, to 2,999.76 and the Nasdaq Composite added 21.56 points, or 0.27 per cent, to 8,145.74.