Sensex breaks 7-day streak, ends 205 points higher
Benchmark indices closed higher on Thursday on hopes that scaling back of US bond buying programme may not kick off as early as next month.
Also, central banker Raghuram Rajan's attempt to talk up the rupee and calm equity and bond markets, a day earlier, too helped. Reserve Bank of India (RBI) governor, Raghuram Rajan, expressed comfort on Wednesday about core inflation and highlighted the narrowing current account deficit.
The sentiment on Thursday was largely boosted by US Federal Reserve's incoming boss Janet Yellen, who said the US economy and labour markets were functioning “far short of their potential and had to improve before the stimulus programme could be rolled back".
Yellen's comments suggested that the tapering of the US Federal Reserve's 85-billion-a-month bond buying program may not kick off earlier than expected. This gave a fresh boost to hopes of easy liquidity to continue its eastwards flow towards emerging markets such as India, facilitated by FIIs.
The 30-share Sensexclosed 205 points or over 1% higher at 20,399 levels and the broader 50-share Niftysurged almost 67 points higher to close at 6,056 levels.
The rupee rose to as high as 62.9525 to the dollar - its highest since November 11, recovering after tumbling to a two-month low of 63.90 on Wednesday. It is currently trading at 63.26-a-dollar.
Yellen said: “A strong economy will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases. I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy.”
Earlier, strong US jobs data re-ignited fears that Federal Reserve could soon start scaling back its stimulus as early as next month which resulted in lower FII net buying of Indian shares for past some sessions.
BSE Sensex has scrapped over 1045 points in the last seven trading sessions, after touching its life-time closing high of 21,239 on mahurat session of Diwali.
U.S. employers took on 204,000 new employees last month, almost twice the number forecast by analysts and defying expectations that a partial U.S. government shutdown would hamper job growth.
The rupee rose to as high as 62.9525 to the dollar - its highest since November 11, recovering after tumbling to a two-month low of 63.90 on Wednesday. It is currently trading at 63.16-a-dollar.
Meanwhile, Wholesale Prices Inflation (WPI) numbers which were announced on Thursday, accelerated to an eight-month high of 7.0% in October, mainly driven by higher fuel and manufactured goods prices, government data showed on Thursday. WPI had risen 6.46% in September.
On the global front, Asian stocks bounced from six-week lows on Thursday, spurred by Federal Reserve Vice Chair Janet Yellen's dovish comments.
The comments sent U.S. stocks surging and supported bond prices, while the dollar came under pressure, although it narrowed its looses during the Asian session.
On the sectoral front, BSE auto, Bankex and realty indices surged over 2% while Capital Goods, power and metal indices ended higher between 1-4-1.8%. Export relaint healthcare and IT sectors were the only losers as Rupee appreciated from its 2-month lows.
The top gainers on the Sensex were Tata Motors, ICICI Bank, L&T, HDFC Bank and M&M which surged between 3.3-5.5%. TCS. Coal India, Sun Pharma, Cipla and HUL were the top laggards.
Tata Motors surged over 5.5% to Rs 385.95, recovering more than half of its losses recorded after announcements of July-September (Q2) earnings.
On the losing side, Coal India is trading lower by 3.8% at Rs 274.10 on BSE in otherwise strong market after reported a lower than expected net profit at Rs 3,052 crore for the quarter ended September 30, 2013 (Q2), due to lower selling prices and higher wage and diesel costs. Analyst on an average had expected profit of Rs 3,399 crore.
The broader markets too found their lost strenth with the benchmark indices- BSE Midcap and Smallcap indices having gained by over 1% in today's trade.
The market breadth in BSE remains firm with 1,418 shares advancing and 1,070 shares declining.
Image: The BSE.