Stock indices surged more than two per cent and the rupee re-emerged strongly on Thursday on the back of fund flows to financial markets as investors flocked for value buying in equities with the expectations that U.S. Federal Reserve unlikely to hike rates in September.
The benchmark BSE 30-share Sensitive Index (Sensex) shot up by 516.53 points or 2.01 per cent to close again above the 26000-mark at 26231.19. It also touched a high of 26302.77.
Meanwhile, the rupee strengthened to 66.04 compared to previous close of 66.14 a dollar, registering a gain of 10 paise.
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Global markets firmed up on Thursday after the U.S. Federal Reserve policy maker and New York Fed President, William Dudley indicated that September rate hike possibilities are lower compared to a week earlier because of weaker economic data in China, which may cause problem for global growth and condition unsuitable for a rate hike in the U.S.
Among broader indices BSE 100 surged by 2.15 per cent and BSE 200 shot up by 2.20 per cent. While mid-cap stocks gained 2.49 per cent, small-cap was up by 2.56 per cent.
On the National Stock Exchange (NSE) the 50-share Nifty closed at 7948.95 with a gain of 157.10 points or 2.02 per cent.
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European and Asian equities ended positive today and currencies were also stronger even though commodity prices remained subdued due to a slump in China.
“Sentiment was upbeat on reports that the significant improvement in indirect tax collections and considerable decline in crude oil have paved the way for the government to make additional investment in infrastructure projects or bank recapitalisation schemes, without hurting its fiscal deficit target,” said Vikas Singhania, Executive Director, Trade Smart Online, a leading discount broking firm.
Besides, he said that recovery in rupee and bargain hunting by the investors also pushed the index upward.
However, he said, volatility may continue to remain on the higher side.
“Buoyant by firm global and domestic cues, markets made a robust start on Thursday and inched further northward as the day progressed,” said Jayant Manglik, President, Retail Distribution, Religare Securities Ltd.
“Despite volatility due to F&O expiry, market breadth ended strongly on the advancing side, indicates buying interest among the participants,” Mr. Manglik added.
However, he said that “we have been observing recovery in fundamentally strong businesses while rests are still struggling to sustain.”