Mumbai, Sep 9 (IANS) A global rally sponsored by the Chinese government’s reforms and expected stimulus coupled with the union cabinet’s approval of spectrum trading, gold bonds and hike in dearness allowance buoyed Indian equity markets on Wednesday.
The positive signs from the government on the reforms front especially on the passage of the goods and services tax (GST) bill, Prime Minister Narendra Modi’s meeting on Tuesday with industry representatives, upcoming seventh pay commission and a strengthening rupee supported the upward movement of the markets.
The relief rally got extended a day after the 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) rose 424.06 points or 1.70 percent.
Similarly, bullish sentiments were seen on the wider 50-scrip Nifty of the National Stock Exchange (NSE). The CNX Nifty closed higher by 130.25 points or 1.70 percent at 7,818.60 points.
The S&P BSE Sensex, which opened at 25,682.87 points, closed at 25,719.58 points — up 401.71 points or 1.59 percent from the previous day’s close at 25,317.87 points.
The Sensex touched a high of 25,820.56 points and a low of 25,553.61 points in the intra-day trade.
Analysts said the reforms being initiated by the Chinese government boosted investor confidence world over and extended the relief rally. Expectations of a new stimulus package in China also soared confidence of investors.
“The global relief rally strengthened after the US markets opened on Tuesday. The positive cues coming in from China has helped buoy sentiments,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services told IANS.
“The Chinese are implementing reforms that will encourage long term investments in stock markets by waving taxes and installing circuit breaker systems to curb volatility in the stock markets.”
“The continuous slide in the Chinese markets had spooked global investors and dampened Indian equities on fear of another recession– caused due to the slowdown in the $10 trillion-worth Asian economy.
The Chinese government has announced plans to increase funding to infrastructure projects and in part provide a stimulus package that might include tax breaks and other incentives. Further announcements on increased spending are expected.
Among the Chinese markets, Hong Kong’s Hang Seng gained by 4.10 percent and Shanghai Composite Index was higher by 2.32 percent.
The rupee too gained strength for a second day in a row. The Indian rupee closed at 66.41 to a dollar — a gain of 14 paise from its previous close of 66.55 to a greenback. The rupee had touched an intra-day weakest point of 66.23.
Market observers elaborated that the rally was also supported by the cabinets decision, PM’s message to increase industry’s investments, the upcoming seventh pay commission and cooling oil prices.
“Key decisions taken by the cabinet to boost the economy like spectrum trading norms, gold monetization schemes, stable rupee, improving commodity prices and short covering boosted the sentiment,” said Gaurav Jain, director with Hem Securities.
Sector-wise, all 12 sub-indices of the BSE made gains during the day’s trade.
The S&P BSE automobile index zoomed by 498.96 points, banking index rocketed by 316.61 points, capital goods index augmented by 2270.04 points, metal index gained by 251.98 points and consumer durables index increased by 234.19 points.
The S&P BSE information technology (IT) rose by 151.20 points and oil and gas index was higher by 121.02 points.
Major Sensex gainers during Wednesday’s trade were: Hindalco Industries, up 7.97 percent at Rs.78.60; Vedanta, up 6.85 percent at Rs.99.85; NTPC, up 5.50 percent at Rs.120.85; Tata Steel, up 4.57 percent at Rs.239.25; and Tata Motors, up 3.98 percent at Rs.344.90.
The major Sensex losers were: Sun Pharma, down 0.63 percent at Rs.840; Gail, down 0.39 percent at Rs.293.90 and Wipro, down 0.23 percent at Rs.561.