Stock indices shot up to close at historical high on Friday by nearly two per cent following the surprise announcement of Bank of Japan’s stimulus programme, which is likely to result in more fund flow to emerging markets.
The Bombay Stock Exchange (BSE) 30-share Sensitive Index (Sensex) surged by 519.50 points or 1.90 per cent to close at 27865.83.
Among the broader indices BSE 100 surged by 1.86 per cent, BSE 200 gained 1.78 per cent and BSE 500 was up by 1.71 per cent
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The mid-cap and small cap stocks went up by 1.24 per cent and 0.96 per cent respectively.
The rally was led by capital goods stocks at 2.66 per cent followed by information technology at 1.96 per cent and power 1.94 per cent. Consumer durable stocks, however, lost by 3.18 per cent.
On the National Stock Exchange (NSE) the 50-share Nifty closed at 8322.20 with a gain of 153 points or 1.87 per cent.
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“In the last three days, the FIIs were buying heavily as they bought Rs.1,200 crore worth shares on Thursday and Rs 1,700 crore shares on Friday,” said Dilip Bhat of Prabhudas Lilladher. He said that world over all markets were on fire and this was compounded by the announcement of Bank of Japan which increased its stimulus programme from 60 trillion yen to 80 trillion yen.
“This means that people who are worried that the U.S. will stop the QE 3 will now sensing that this would gradually replaced by Japan and they are expecting that the Europe will also continue its easy money policy,” Mr. Bhat added. “Markets built up on Thursday’s rally on the back of renewed optimism on fiscal reforms, improved growth in U.S., liquidity easing by Japan and diminished possibilities of an immediate increase in U.S. interest rates,” said Dipen Shah, Head- Private Client Group Research, Kotak Securities.
In the near term, the focus will consistently remain on further reform initiatives. Said Mr. Shah, “Winter session of the Parliament will be closely watched for GST, land reforms, etc. Economic growth in China/Eurozone will engage the attention of the market and the remaining quarterly results will have stock-specific impact.”