After witnessing a rout last week, Indian stock markets started the week with a stellar performance on the first trading session. Both BSE Sensex and NSE Nifty recorded their biggest single day gain in over one year as hectic buying in blue chips stocks helped the markets to catapult after a weeklong battering.
The 30 share BSE Sensex ended the day up by 568 points or 2.47%. Its biggest rise since January 15, 2015, when India’s banking sector regulator – Reserve Bank – went for a surprise 25-basis point rate cut, the first of four such reductions last year.
The 50-share NSE Nifty too surged 182 points, or 2.61%.
Both indices had taken a severe beating and posted their worst weekly performance since July 2009, with the Sensex tumbling 1,631 points or 6.62%, and Nifty down 508 points.
The rally mostly came on the back of visible signs of life in global stocks after last week’s huge sell-off and domestic institutional investors (DIIs) upping their buying momentum.
Domestic investors turned net buyers as they bought shares worth nearly Rs 2,000 crore while foreign portfolio investors (FPIs) offloaded shares worth Rs 1,300 crore, as per the provisional data.
Moreover, covering up by speculators who had been creating short positions in the past several sessions buoyed sentiment.
Buoyant global financial markets also underpinned the investor optimism.
The magnificent pullback move was spearhead by a rebound in metal, financials, realty, auto, energy, infra, technology and pharma stocks as investors and funds went on a buying spree from oversold territory alongwith short-covering.
Financial markets across the globe went into a tailspin last week on global growth concerns coupled with ongoing worries about China slowdown even as Nifty breached the 7,000 level to end at a 21-month low.
Expectations of big-bang policy initiatives as well as ambitious roadmap to revive the struggling economy in the upcoming Union Budget, too contributed to the optimism.
Moreover, US Federal Reserve chairwoman Janet Yellen had downplayed the possibility of another US interest rate hike amid the current financial turmoil worldwide, but sought to assure markets that US growth was steady and the labour market was improving.
Trading began on the strong foot after last weekend’s heavy sell-off and maintained its strong recovery momentum throughout the session.
On the macroeconomic front, WPI inflation fell to minus 0.9% in January, reversing its four months of rising trend.
Earlier in the day, this positive momentum was visible across Asian markets. Japan’s Nikkei jumped 7.16 per cent, Hang Seng 3.27 per cent and Kospi 1.47 per cent, while Shanghai closed marginally lower.
(With agency inputs).