Stocks

Sensex soars on diesel price hike, US Fed’s new stimulus plan

Our Bureaus Mumbai | Updated on March 12, 2018

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Realty index was up by 4.58 per cent, followed by metal (4.25 per cent) and banking (4.02 per cent) indices.

The stock market zoomed up today with a double thrust — one coming from the Centre and the other from the US Federal Reserve.

The Government decision late on Thursday to bite the bullet and raise diesel prices by Rs 5 a litre and the US Federal Reserve unveiling the third round of stimulus gave a 2 per cent boost to the Sensex that closed up 443 points at 18,464.27 on Friday.

The sudden burst of policy initiatives so caught the imagination of the market that it chose to ignore the news of the unexpected high inflation rate of 7.55 per cent for August that came in around noon.

FII inflows

The added good news for the market was the US Fed move. According to exchange data, foreign institutional investors pumped in about $0.5 billion on Friday.

Foreign funds have been flowing into the market ever since the European Central Bank announced its bond-buying programme last week.

All assets across the globe appreciated on the Fed move.

Nifty surged 2.6 per cent or 142.3 points to end at 5577.65. It floated above the 5500 mark throughout the session, went very close to the 5600-mark and touched a high of 5597.

RUPEE RALLIES

The rupee also rallied to a two-month high of 54.31 to a dollar thanks to the strong equity market and sustained capital inflows.

The metals, banking and realty sectors led the rally. Jindal Steel and Hindalco were top gainers, rising about 7.5 per cent. Axis Bank and State Bank of India gained about 6 per cent. However, shares of oil companies slipped between 1 per cent and 2.5 per cent, as analysts felt that increase in fuel prices will not reduce losses substantially.

“Suddenly, the Government has woken up to reality and seems to be in a hurry to re-enter the reform path to ward off downgrade threats from global rating agencies.

Following the diesel price hike, market-men now expect a slew of reform measures such as foreign direct investment in aviation, retail and cable and digitisation.

In anticipation of this, stocks from these sectors gained sharply,” said Arun Kejriwal of KRIS Securities.

Profit-booking

Indeed, some of the initiatives came post market hours.

“There is some amount of profit-booking happening in the market. But we are not seeing a downtrend. Investors can wait for correction before entering the market, but at this point the market seems all set to revive,” said Alex Mathew, Head of Research, Geojit BNP Paribas Financial Services.

>badrinarayanan.ks@thehindu.co.in

>sneha.p@thehindu.co.in

Published on September 14, 2012

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