Markets soar on rate cut hopes
Indian stock markets soared on Tuesday, marking its biggest post-Budget day rally ever, as fiscal measures in the Budget offered more elbowroom to RBI to go for rate cut.
Sensex goes up by 777 points, its best ever single-day show in seven years
Mumbai: Indian stock markets soared on Tuesday, marking its biggest post-Budget day rally ever, as fiscal measures in the Budget offered more elbowroom to RBI to go for rate cut.
Finance Minister Arun Jaitley in his Budget speech on Monday announced that the government will go for fiscal prudence and keep deficit at 3.5 per cent for 2016-17.
This has added to the clamour that the Reserve Bank may go for a rate reduction as early as this month to revive private investment and spur growth. The rupee, at 67.85, was on a higher ground against the dollar, which was lapped up by market participants.
Global cues remained positive as major markets in Asia and Europe ruled firm after China announced monetary easing in an attempt to bring its economy back on track.
The benchmark BSE Sensex closed at 23,779.35, a jump of 777.35 points, or 3.38 per cent. Tuesday's gain is the biggest single-day rise in nearly seven years since May 18, 2009 when the 30-share barometer had jumped 2,110.79 points.
It had shed 152.30 points in highly volatile session on Monday. At the close, the NSE Nifty was up 235.25 points, or 3.37 per cent, at 7,222.30. Prominent gainers among the 30 Sensex stocks include ITC Ltd, ICICI Bank, Maruti Suzuki, Hero MotoCorp, Adani Ports, GAIL and Tata Motors.
Among Sensex components, 27 stocks gained, while ONGC, Hindustan Unilever and Dr Reddy's declined. The BSE FMCG index gained the most by surging 4.90 per cent, followed by consumer durables 4.37 per cent, realty 4.21 per cent and auto 4.19 per cent. In line with the overall trend, the small-cap index climbed 3.23 per cent and the mid-cap 3.04 per cent.
Value-buying in several battered stocks and covering-up of short positions provided further momentum, brokers said. UBS, the global financial services major, in a research note, said RBI is likely to go for a 50 basis point rate cut this calendar year as the Budget gives the central bank sufficient room to adopt a more accommodative stance.
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