Sensex rallies 223 points on heavy FII inflows

Chasing the 17,000 level,the Sensex rose 1.35 per cent on Wednesday to its highest close in almost 16 months,as signs of...

Chasing the 17,000 level,the Sensex rose 1.35 per cent on Wednesday to its highest close in almost 16 months,as signs of a US economic recovery added to the upbeat hopes for robust quarterly earnings. Reserve Bank governor D Subbaraos statement that the central bank will wait for economic recovery to take shape before reversing the current monetary policy also cheered the sentiment.

With foreign institutional investors on a buying spree,the 30-share BSE Sensex 222.59 points to 16,677.04 points,its highest close since May 22,2008. The 50-share NSE Nifty index closed 1.4 per cent higher at 4,958.60.

FIIs made net investments of Rs 1,105 crore on Wednesday,taking the total inflows for September to Rs 2,983 crore. The benchmark Sensex,which rose for a second day,has gained nearly 73 per cent since the start of January. Thanks to heavy FII inflows and the strong market,the Indian rupee also appreciated sharply by over 40 paise to close at a one-month high of 48.23/24 against the dollar.

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US Federal Reserve chairman Ben Bernankes comment that the US recession was probably over was a shot in the arm for increased fund flows into riskier assets such as equities. Foreign funds have moved over $9 billion into Indian stocks this year,with more than $700 million coming in so far this month. World equities rose to 11-month highs,and US stock futures pointed to a stronger opening on Wall Street.

The advance tax paid by corporates indicates better than expected quarterly numbers (for Q3) and coming quarters. Till recently,everybody was talking about overstretched valuations but after the announcement of advance tax numbers,that fear has gone from the market, said an analyst with Geojit BNP Paribas Financial.

Banks were among the big gainers after advance taxes paid by companies for the September quarter pointed to stronger profits.Tata Steel,which owns Corus,was the top gainer in the main index on expectations that a US recovery would boost demand. Tata Steel share jumped 8.2 per cent its biggest one-day rise in more than three months to Rs 531.60,its best close in a year.

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