The Indian benchmark indices gained nearly 2% on Thursday as data from the Reserve Bank of India (RBI) showed that the current account deficit (CAD) narrowed in the quarter ended March and the rupee recovered slightly while staying below the 60-mark.
The 30-share Sensex gained 324 points,or 1.75%,on Wednesday to close at 18,875.95 as select large caps,including Reliance Industries,posted significant gains. Meanwhile,the broader Nifty closed at 5,682.35,up 93.65 points,or 1.68%. Trading was,however,volatile due to the expiry of the derivatives contracts.
The gains in the benchmark indices were largely supported by energy stocks that rose in anticipation of a gas price hike. While RIL gained 3.48% to close at R830.45,ONGC and Oil India moved up by 4.14% and 2.32%,respectively.
Earlier in the day,investor sentiment was boosted by the central banks data,which showed that the CAD had eased marginally in the final quarter of the last fiscal,which could also help ease pressure on the rupee that closed at 60.20 on Thursday.
CAD moderated sharply to 3.6% of the GDP in Q4 of 2012-13 from a historically high level of 6.7% of GDP in Q3 of 2012-13 as trade deficit narrowed, said RBI. The current account gap in the March quarter was $18.1 billion,lower than $21.7 billion deficit a year earlier.
Analysts say the market is also betting on the Federal Reserve continuing its stimulus programme after data showed that the US economy expanded at a revised 1.8% annualised rate from January through March,down from a prior estimate of 2.4%.
FIIs,however,continued their selling spree with provisional data showing net sales of $173 million in the equity markets. FIIs have now been net sellers for 13 consecutive trading sessions with selling adding up to $2.05 billion.
With the rupee staying below the 60-mark,software stocks also registered gains as a weaker rupee could boost the earnings of the IT majors that earn a large part of their revenue in dollar. Infosys Technologies,TCS and HCL Tech all gained over 3% each.