The benchmark Sensex and the broader Nifty surged to record levels today
after the BJP's victory in three state assembly elections sparked optimism
about the main opposition party's chances in general elections next year. The
S&P BSE Sensex climbed 487.21 points to an all-time high of 21,483.74 and
ended with a gain of 329.89 points, or 1.57 per cent, at 21,326.42, a new
closing high. The 50-share CNX Nifty on the National Stock Exchange rose 104
points, or 1.66 per cent, to 6,363.90, after touching an intra-day peak of
6,415.25. Both indices surpassed their previous highs on November 3.
The Sensex had surged 249 points on December 5 after exit polls showed
leads for the BJP. "The state assembly elections are viewed by many as a
preview of the general elections, which are due by May 2014. However, we would
caution that state election outcomes are not always a reliable indicator of
general election prospects," Nomura said in a note today.
The rupee also climbed to an almost four-month high of 60.90 against the
dollar as local stocks strengthened. Capital goods and bank stocks led 12 of
the 13 BSE sectoral indices higher. ICICI Bank and Larsen & Toubro were the
biggest contributors to the gains on the Sensex. Sesa Sterlite and ONGC were
among the 26 of the 30 index shares that moved up.
Analysts have earlier said sentiment could be affected once the US
Federal Reserve starts tapering its stimulus programme as the world's largest
economy recovers, reducing liquidity available for investing in emerging
markets. Foreign institutional investment in the Indian stock market has
crossed Rs 1 lakh crore so far this year, or USD 18 billion, according to Sebi
data. They bought a net Rs 863.77 crore of shares on Friday.
"The focus of the market would again shift to the FOMC (Federal
Open Market Committee) meeting and expectations about the Fed taper programme
in the wake of strong economic data from that economy," said Sanjeev
Zarbade, Vice President - Private Client Group Research, Kotak Securities.
"Markets will also watch out for other domestic issues like inflation and
RBI's take on interest rates," he said.
The major Sensex gainers were ICICI Bank (5.16 pc), Sesa Sterlite (5.04
pc), Larsen & Toubro (4.52 pc), Maruti Suzuki (3.85 pc), ONGC (3.48 pc),
NTPC (2.85 pc), Wipro (2.8 pc), Hindalco Industries (2.74 pc), M&M (2.22 pc)
and HDFC Bank (2.02 pc). Among the S&P BSE sectoral indices, Captial Goods
rose 3.14 pc, followed by Bankex 2.93 pc, Realty 2.61 pc, Oil & Gas 1.71
pc, Power 1.59 pc and Auto 1.37 pc. "BJP is seen as a market reformist and
a boon to the jittery markets by many investors and traders. A strong
rupee...also helped the markets to trade strong," said Jignesh Chaudhary,
Head of Research at Veracity Broking Services.
Rupee @ 2-month high at 61.13
The rupee surged to its
highest level in nearly four months in intra-day trade and fell back to close
with a 28 paise gain at 61.13 against the dollar today, boosted by stocks that
climbed to a record after BJP won three out of four state assembly elections.
Support for the rupee also came as foreign investors continued to buy local
stocks and exporters sold dollars. At the interbank foreign exchange market,
the rupee commenced sharply higher at 60.90 a dollar from the previous close of
61.41 and immediately touched 60.84, a four-month high, on the back of a strong
rally in local stocks. The gains were trimmed and the local currency dropped to
the day's low of 61.21 on dollar demand from importers before closing at 61.13,
a two-month high. Previously, the rupee had touched an intra-day high of 60.45
on August 12, and it had closed at 61.07 on October 11.
"The recent gains in
the currency are mainly attributed to the assembly elections. BJP, which is
widely seen by investors as being more business friendly, swept recent state
elections. Dollar weakness also continued to contribute to the gains in the
rupee," said Abhishek Goenka, CEO of India Forex Advisors.
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