Lower risk of US rate hike boosts Sensex 241 points

Mumbai, Oct 9 (IANS) Lower chances of a US rate hike this month cheered investor sentiments and propelled a barometer index of the Indian equity markets to a gain of 241 points or 0.90 percent during the late-afternoon trade session on Friday.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) also made gains during the intra-day trade. It was up 55.35 points or 0.68 percent at 8,184.70 points.

The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE), which opened at 26,974.92 points, was trading at 27,087.31 points (3.00 p.m.) — 241.50 points or 0.90 percent up from its previous close at 26,845.81 points.

The Sensex had so far touched a high of 27,200.44 points and a low of 26,910.59 points in the intra-day trade.

The Sensex made intra-day gains a session after profit booking, coupled with weak global cues and caution over the upcoming quarterly results arrested its six-day upward streak.

The Indian equities’ barometer index closed 190 points or 0.70 percent down on Thursday.

Analysts said the markets made intra-day gains on the back of dovish FOMC (Federal Open Market Committee) minutes. The US Fed’s FOMC minutes which were released on Thursday indicated lower chances of a rate hike in October.

The FOMC minutes were of the September 16 meeting in which the US Fed decided not to hike lending rates.

The US Fed is slated to conduct its FOMC meet on October 27-28.

The FOMC minutes assumes significance as higher interest rates in the US are expected to lead away FPIs (Foreign Portfolio Investors) from emerging markets such as India.

“The markets rose on the back of dovish FOMC minutes which lowered the chances of an October rate hike there,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

“The Bank of England’s monetary policy decision too uphold the current lending rates also cheered the markets and gave a positive cue. The BoE decision has also given further guidance to the US Fed’s October moves,” James added.

The rupee too made gains after the FOMC minutes were released. It opened positive at 64.90 to a US dollar from its previous close of 65.05 to a greenback on Thursday.

The rupee was trading at 64.83 to a US dollar (at 2.30 p.m.). It touched the day’s high of 64.75 to a greenback.

“Yesterday’s FOMC minutes indicated that the authority (US Fed) is in no hurry to raise rates… this hurt dollar demand,” Hiren Sharma, senior vice president, currency advisory at Anand Rathi Financial Services, told IANS.

Nitasha Shankar, vice president, research with YES Securities, told IANS: “Metal and sugar stocks continue to trade with strength, while auto and reality stocks are witnessing profit booking.”

Sector-wise, information technology (IT), banking, capital goods, automobile and healthcare stocks witnessed healthy buying.

The S&P BSE IT index augmented by 181.71 points, banking index gained by 143.70 points, capital goods index rose by 138.54 points, automobile index soared by 109.44 points and healthcare index edged-higher by 96.41 points.

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