Sensex rallies 387 points on rate cut hopes
Benchmark indices of Indian stock markets surged more than two percent Tuesday, due to strong buying support...
Benchmark indices of Indian stock markets surged more than two percent Tuesday, due to strong buying support in banking, auto and realty stocks on expectations of cut in interest rates as inflation eased to a three-year low. A sharp drop in crude oil and gold prices, that is expected to have a positive impact on the country's current account and trade balance, also boosted the investors' sentiments in the markets. The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 18,356.32 points, ended the day at 18,744.93 points, up 2.11 percent or 387.13 points from its previous day close at 18,357.80 points. The Sensex touched a high of 18,771.33 points and low of 18,325.73 points in the intra-day. The wider 50-scrip S&P CNX Nifty of the National Stock Exchange (NSE) also rallied more than two percent. The Nifty closed 2.16 percent or 120.55 points higher at 5,688.95 points. There was strong buying support in interest-rate sensitive banking, auto, capital goods and realty stocks. The BSE banking index jumped nearly three percent. Auto index rallied 2.54 percent, capital goods index gained 2.53 percent and realty index advanced 2.29 percent. A sharp drop in inflation has boosted the hope that the Reserve Bank of India (RBI) would lower interest rates in the annual policy review next month. According to the government data released Monday, inflation based on Wholesale Price Index (WPI) fell to 5.96 percent in March, the lowest level since November 2009. Analysts said the March inflation data would give enough room to the central bank to cut interest rates in the upcoming policy review. The RBI is scheduled to announce its annual monetary policy for 2013-14 on May 3. Decline in gold and crude oil prices has also boosted sentiments in the markets. Gold price fell below Rs.27,000 per 10 gram for the first time in almost two years. Crude oil prices also dropped sharply in the global markets. Major Sensex gainers were: Maruti Suzuki, up 4.23 percent at Rs.1483.70; Mahindra & Mahindra, up 3.95 percent at Rs.845.55; ONGC, up 3.87 percent at Rs.331.50; HDFC, up 3.84 percent at Rs.804.80; and Dr Reddys Lab, up 3.56 percent at Rs.1919.55. Only two of the 30 Sensex scrips closed in the red. Infosys fell 1.71 percent at Rs.2293.95 and Sterlite Inds closed 1.28 percent down at Rs.85.10.