Sensex soars 439 pts,Re gains 3.1% on euro deal,reform hopes

With bulls back in action,the Sensex settled at 17,429.98 — a level last seen in April 19 — higher by 439.22 points or 2.59 per cent. Investor wealth,or market capitalisation,rose by Rs 1.17 lakh crore to Rs 61.52 lakh crore. The rupee rose 2.7 per cent on the week,its biggest weekly gain in over two-and-a-half years.

Among major Asian markets,Hong Kong’s Hang Seng Index jumped 2.2 per cent,while Japan’s Nikkei Stock Average shot up to finish 1.5 per cent higher. Elsewhere,China’s Shanghai Composite Index gained 1.4 per cent,South Korea’s Kospi climbed 1.9 per cent,Australia’s S&P/ASX 200 index rose 1.2 per cent and Taiwan’s Taiex advanced 1.8 per cent.

Dipen Shah,head of fundamental research,Kotak Securities,said,“In a very significant announcement,the EU leaders said the European stability mechanism would be able to lend directly to banks to recapitalise them,without preferential seniority status. Eurozone leaders also agreed to take emergency action to bring down Italy’s and Spain’s spiraling borrowing costs and create a single supervisory body for eurozone banks by the end of this year,a first step towards a European banking union. Apart from this,optimism on more fiscal reforms from the government in India supported the markets.”

“We remain optimistic on the reforms front with the PM now handling the finance portfolio also. Reforms might also allow the RBI more flexibility in determining its fiscal policy,” Shah said.

“The improved global risk environment and hopes of meaningful policy reforms at home after Prime Minister Manmohan Singh took charge of the Finance Ministry boosted the rupee,” said a currency dealer.