Stock indices gained by more than one per cent on the bourses on Thursday following the decision of US Federal Reserve to keep interest rates unchanged even though the Greece stand-off with European Union is continuing.
The benchmark BSE 30-share Sensitive Index (Sensex) closed at 27115.83 with a gain of 283.17 points or 1.06 per cent. It touched an intra-day high of 27175.39.
Among other broader indices, BSE 100 was up by 1.01 per cent and BSE 200 gained 0.95 per cent. While mid-cap stocks gained 0.80 per cent, small-cap was up by 1.07 per cent.
On the National Stock Exchange (NSE), the 50-share Nifty gained 83.05 points or 1.03 per cent to close at 8174.60.
“The Sensex has surged over 300 points as the US Fed left the interest rates unchanged,” said Kamlesh Rao, CEO, Kotak Securities. However, the US Fed did not give any major hints about the future trajectory of interest rates and more importantly, on the timing of the first rate hike.
The Federal Reserve said, the economy was expanding moderately.
It also hinted that it would wait for further improvement in the labour market and for higher confidence that inflation would rise, before making any decision on hiking the rates.
“Even as the markets is weathering the monsoon, Greece crisis and the fine print of the US Fed policy now, the medium to long term growth story is still intact,” said Mr. Rao adding, “Because of government’s continued focus on reforms, we continue to maintain a positive stance on the markets from a medium term perspective.”
Meanwhile, the rupee strengthened further to 63.73 a dollar on Thursday compared to its previous close of 64.12. “Indian rupee is expected to continue to trade a narrow range, thanks to active intervention of the central bank on both sides of the market,” said Mr. Rao.
“We may continue to see the central bank intervene to keep the dollar supported between 63/63.30 levels on spot,” Mr. Rao said. At the same time, depreciation beyond 64.50/70 is appears unlikely, as the central bank has emphasised on the need for stability. However, he said if the Greek scenario blows out of control, then rupee can decline much beyond 65, possibly towards 66 levels, but “we then also expect RBI to intervene to bring prices within its preferred band,” he said.
