Dovish US Fed pushes Sensex 438 pts up, Nifty up 138 pts

Asian and European markets cheered the US Federal Reserve’s Chair Janet Yellen dovish comments that the central bank needed to proceed cautiously on raising interest rates in midst of global risk factor.

Further, covering of short positions ahead of the expiry of March series in derivatives segment and hopes of a rate cut by the Reserve Bank of India at the monetary policy review on Tuesday boosted the sentiment. If the US Fed delays further hike in rates, the move will boost foreign capital inflows, said an analyst.

[related-post]

The rupee also surged by 17 paise to close at three-month high of 66.37 per dollar on sustained selling of dollars by banks and exporters amid firm stock markets.

Jayant Manglik, president, Retail Distribution, Religare Securities, said, “After two days of profit taking, Nifty resumed its bullish tone on Wednesday and gained nearly two per cent. Sentiments were upbeat from the beginning, thanks to firm global cues and recovery in rupee against dollar. Besides, latest statement by the finance minister that he will reach out to the Congress for its support to the much-delayed GST Bill in second half of the Budget session, added to positivity.”

The rate sensitive pack — bank, auto and realty shares — led the rally which was further supported by other sectors as the session progressed. Dipen Shah, senior vice-president, Kotak Securities, said, “Markets reversed Tuesday’s losses on strong buying in front-line stocks ahead of the fiscal end. Expectations of rate cut by the RBI led to strong gains for the banking sector. Dovish comments from Janet Yellen also boosted sentiments.” Going ahead, markets will watch out for the all-important RBI policy meeting on April 5, post which quarterly results will dictate the stock specific trends.

“We will watch out for legislative action in the second half of the budget session, which will have important implications for the market,” he said. Vinod Nair, head of research, Geojit BNP Paribas Financial, said the market witnessed a positive rebound led by a cautious stance by US Fed towards future rate hike decision.