Benchmark BSE Sensex surged over 500 points on Tuesday and Nifty reclaimed 8,650-mark on account of buying in frontline blue chip counters amid firm Asian cues. Apart from blue chips, broader indices too participated in the rally with both midcap and small cap indices surged over a per cent each. The benchmark BSE Sensex closed 520.91 points up at 28,050.88. The Nifty 50 index settled 157.50 points higher at 8,677.90.
Below are 4 reasons why Sensex rallied over 500 points intraday on Tuesday:
1) Market sentiment remained upbeat since the early trade with a private report stating that India’s current account deficit is likely to stay below 1 per cent of GDP this year, largely due to a sharp fall in the trade deficit as against last year. As per the report, the widening of the trade deficit will be watched closely, especially at a time when the services sector receipts and private transfers are under pressure.
2) Appreciation in Indian rupee further supported domestic equity markets on Tuesday. The local currency was trading nearly 21 paise higher at 66.68 against the US dollar in the late trade as mixed US economic data damped the outlook for US interest-rate increases.
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3) On the global front, Asian markets ended in green as oil prices inched higher and after mixed US economic data helped ease worries about a possible rate hike by the Federal Reserve in November. Financials and commodity-related stocks paced the gainers, even as underlying sentiment remained somewhat cautious ahead of a slew of Chinese data due on Wednesday and the European Central Bank meeting on Thursday. Japanese shares ended modestly higher ahead of the earnings season starting later this week. Chinese stocks ended higher as Shanghai’s US dollar-denominated B shares stabilized following the previous day’s sell-off.
4) Short Coverings: Shreyash Devalkar, fund manager, equities, BNP Paribas Mutual Fund said, “Bucking the recent negative trend of closing in the red for eight consecutive days, benchmark indices on Tuesday traded with sharp gains and closed with gains of more than 1.5 per cent for the day. Markets traded firm as investors searched for bargains while traders drove up stocks on short coverings.”