After plunging over 200 points to its lowest level in five months, the Sensex on Monday recovered to close 23.24 points higher at 15,988.40 riding on rate cut hopes sparked off by the Reserve Bank, rupee’s new-found strength and global crude oil falling to a 16-month low.
The late rally was led by Larsen & Toubro, Reliance Industries and banks including SBI.
After losing over 250 points on Friday, the 30-share index opened weak and soon touched 15,748.98 — the lowest level since January 9. The poor U.S. employment data and concerns over Chinese growth weighed over the Asian stocks with Tokyo market falling to its 28-year low.
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But, RBI Deputy Governor Subir Gokarn’s comment that below-trend growth and falling crude oil prices offer a window to ease policy stance soothed investor’s nerves.
“(For one,) the growth is somewhat lower than expectations and that may have positive, moderating impact on core inflation. Two, oil prices have come off somewhat more than expected. Those are the two factors that suggest more room (for monetary policy),” Mr. Gokarn told reporters in Mumbai.
The trading mood further improved as the rupee strengthened against the dollar touching a one-week high while the Brent crude oil fell below the $96 per barrel level.
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Buoyed by these factors, the Sensex closed at 15,988.40, up 23.24 points.
On similar lines, the 50-share NSE Nifty rose by 6.55 points to 4,848.15, after touching a low of 4,770.35.
Amongst Sensex pack, Larsen & Toubro was the biggest gainer rising 3.43 per cent. The recovery was also supported by financial scrips including ICICI Bank, HDFC Bank and SBI that rose over one per cent each. Other rate-sensitive stocks such as DLF, Tata Motors and Hero MotoCorp rose 1-2 per cent.
Energy majors ONGC and Reliance rose 3.2 per cent and 1.31 per cent respectively, following lower oil prices globally.