Mumbai, Sept. 10: The Sensex surged past 20000 once again — the first time it has gone past the psychological peak since July 25 — as fears of an impending US attack on Syria appeared to recede.
The bellwether index rose 727 points, or 3.77 per cent, to close at 19997.10 — just 3 points shy of Peak 20000. It’s a sure sign that the markets have turned optimistic about foreign investor inflows after Reserve Bank of India governor Raghuram Rajan unveiled his first burst of reforms on Mint Street last Wednesday.
It was the biggest gain in absolute terms since the Sensex surged 2110.79 points, or 17.34 per cent, on May 18, 2009, when the UPA government came to power. The NSE Nifty index jumped 216.35 points, or 3.81 per cent, to 5896.75, after touching 5904.85.
Foreign investors have bought shares worth over Rs 4,500 crore in the five trading sessions of September.
On Tuesday, the Indian bourses recorded the biggest gains in Asia as they appeared to shrug off all the negativity that had built up in the market towards the end of August when the market was spooked by rumours about the return of capital controls in India.
The rumours were triggered by the RBI’s decision last month to limit remittances made by resident individuals to $75,000 in a year from $200,000 earlier. It also brought down the limit for overseas direct investment by domestic companies by almost one-fourth.
But there was some good news on Tuesday when the government reported that trade deficit in August had dropped to $10.91 billion from $12.2 billion in July.
The rupee also leapt 140 paise — recording its biggest gain in two weeks — as it closed above the 64-mark at 63.84 against the dollar. Banks and exporters preferred to reduce their dollar positions on expectations of additional foreign fund flows into the equity market.
“It’s been a euphoric day for Indian equity markets as Nifty and Sensex clocked gains of over 3.5 per cent. A heavy dose of short-covering on the back of receeding risk of military intervention in Syria and positive vibes created by the new RBI governor drove stocks upwards,” said Anindya Banerjee, currency analyst at Kotak Securities.
“As far as the rupee goes, 63.70/80 is a key level in spot trading. If it breaches that level it could rise to levels of 63.00/62.50. We expect the dollar to remain capped around 65.20/50 levels on spot. The Nifty to stay ranged between 5950 and 5650, as bulk of short covering demand seems to have dissipated from the system,” Banerjee added.
The biggest gainers in the Sensex were Tata Motors which leapt 9.88 per cent to close at Rs 349.20 after its UK subsidiary Jaguar Land Rover reported record sales performance in August. Bharti Airtel rose 8.15 per cent to Rs 339.10 and Hero Motocorp climbed 7.22 per cent to Rs 2,068.30.
Meanwhile, bond yields fell sharply. The yield on the 10-year bond was down 12 basis points at 8.51 per cent.