US Federal Reserve chairman Ben Bernanke’s decision to defer tapering stimulus measures was the unexpected surprise that fuelled a global bull run on Thursday.
The BSE Sensex surged 684.48 points or 3.4 per cent, to close at 20,646.64, registering its highest level since November 11, 2010.
The rupee jumped 2.5 per cent to 61.77. With this, the rupee has now gained 10.5 per cent since the beginning of this month. The currency had faced its worst rout after the Fed indicated that in May that it intended to tapering stimulus or buying US Treasury bonds by $10 billion.
The broader NSE Nifty soared 216.10 points or 3.7 per cent to end at 6,115.55, its highest close since May 2013.
“The Fed’s move means that the ultra easy money policy will continue in the US, interest rates will remain between 0 and 1.5 per cent, banks will continue to get refinance at lower rates and money will flow into emerging markets. The outflow of money will also stop from Indian markets for now,” said Deepak Parekh, chairman, HDFC Ltd adding that the rupee has to strengthen.
Another expert said that the Fed move merely gives some breathing room and the RBI should take suitable measures so that the economy is better off when the tapering actually begins.
“The move gives some extra time to deal with the market. It provides a good opportunity to RBI to ensure that the measures taken to stabilise the rupee continue and thereby look to attract inflows into the economy,” said the head of a leading foreign asset management company.
Bank stocks emerged as the biggest gainers. The banking index at the BSE rose by 6.8 per cent. While Yes Bank rose by 22 per cent, other major banks were up between 5 and 10 per cent. The NSE Bank Index vaulted 6.7 per cent amid hopes the RBI Governor Raghuram Rajan would ease some of its cash tightening steps on Friday.
Among other markets, while the Dow Jones rose by 1 per cent on Wednesday, Japan’s Nikkei climbed 1.8 per cent on Thursday. European markets were up 1 per cent.
Wall Street’s major indexes