The BSE Sensex jumped over 500 points on Friday and reclaimed the psychological 28,000-mark. The BSE Sensex closed 517.78 points, or 1.88 per cent, higher at 28,067. NSE Nifty ended 162.70 points higher at 8,518.55.
The Indian stock markets remained in positive terrain throughout the day on Friday after fall in Chinese yuan slowed down and inflation plunged to historic low of 4.05 per cent in July, from 2.40 per cent in June. This raised hopes for a possible rate cut by Reserve Bank of India in the upcoming September monetary policy review.
Four reasons why Sensex jumped over 500 points today:
1) Fresh buying in realty, healthcare, auto and banking stocks lifted domestic stock markets. At 1.14 pm, the BSE Realty index, BSE Auto index, BSE Bankdex and BSE Power were up 6.26 per cent, 2 per cent, 2.25 per cent and 1.38 per cent, respectively.
2) Wholesale price index-based inflation plunged to (-)4.05 per cent in July, from (-)2.40 per cent in June. The latest set of numbers followed IIP and retail inflation data earlier this week which eased in July, raising hopes for a possible rate cut by RBI. This cheered the investors.
Soumya Kanti Ghosh, chief economic adviser & GM, Economic Research Department, SBI, said “We expect the August CPI numbers to be sub 3.5 per cent. We now expect the Reserve Bank of India to go for a 25 basis points repo rate cut in September policy.”
3) Stability around yuan: China’s currency stabilised for a second day, easing uncertainty about its direction after an unexpected devaluation earlier in the week. China’s central bank on Friday raised the value of the yuan against the US dollar by 0.05 per cent, ending three days of falls after a surprise devaluation.
4) Investors cheered the reports that the government may go for a two-day session of Parliament in September to pass the Goods and Services Tax Bill ahead of the Bihar elections. The monsoon session of Parliament ended on Thursday without passage of any major reform bills.