Mumbai, Oct. 4: A bullish frenzy rippled through the stock markets right from the start of trading today as investors scooped up stocks in anticipation of another round of Big Bang reforms. Late in the evening, the cabinet took a slew of decisions, which showed that those hopes were not unfounded.
The bellwether Sensex leapt above the 19000 mark for the first time in 15 months, with cyclicals and high beta stocks leading the surge on the Street.
Beta is the movement of a stock or a portfolio when compared with a benchmark index. Investors have recently taken a shine to these stocks in the hope that these sectors will stand to benefit the most from various measures to be announced by the government.
Even as bold steps taken by the Centre have buoyed investor sentiment, market analysts aver that stocks have rallied because of brisk inflows from foreign institutional investors (FIIs). In this calendar year so far, these investors have ploughed over $16 billion into domestic equities with the result that India has been one of the outperformers among various markets.
After opening 30 points lower than Wednesday’s close, the BSE benchmark hit 19107.04 — its highest level since July 2011 — around mid-session as investors poured funds across stocks in realty, consumer goods, banks, capital goods and power in anticipation of fresh reforms, brokers said.
While the benchmark index opened on a positive note at 18939.75 in line with global indices, the rally strengthened ahead of a crucial cabinet meeting to consider an increase in FDI in insurance.
The Sensex closed at 19058.15, a gain of 188.46 points, or 1 per cent. The 50-share Nifty of the NSE, after breaching the 5800-level, ended at a 17-month high of 5787.60, a gain of 56.35 points.
Shares of companies engaged in insurance, including Aditya Birla Nuvo, Bajaj Finserv and Reliance Capital, settled with gains in the range of 2-4.5 per cent in anticipation that the government would raise the FDI cap to 49 per cent from 26 per cent. Aditya Birla Nuvo closed 4.41 per cent up at Rs 949.80, while Reliance Capital rose 1.96 per cent to Rs 452.85 on the BSE. Bajaj Finserv was up 3.11 per cent at Rs 953.85.