The festival of lights brought solace to the stock market, as the Sensex gained 498.52 points in a special Muhurat trading session on Tuesday. The 30-share Sensex of the Bombay Stock Exchange (BSE) ended at 9,008.08 points, 5.86% higher from the previous close. The S&P CNX Nifty of the National Stock Exchange (NSE) gained 160.40 points, or 6.35%, to close at 2,684.60 points.
Share prices in Europe and Asia gained on Tuesday as India was celebrating Diwali. Share prices across Asian markets gained as well, reversing four days of decline. European and the US markets also opened in the positive terrain.
Cues from the US and Europe markets boosted sentiments of the domestic markets, said dealers. The stock rebound also helped crude oil prices rise for the first time in three days. Opec secretary- general said the group may call a new meeting if prices fail to react to the 1.5 million-barrel-a-day production cut announced last week. Crude oil for December delivery rose $1.29, or 2%, to $64.51 a barrel on the New York Mercantile Exchange.
Ved Prakash Chaturvedi, MD of Tata Mutual Fund said, ?I assume the volatility will remain for the next couple of weeks as we are witnessing huge redemption pressure from overseas funds. We might witness some measures from the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi) to infuse more liquidity in the markets.?
The market value of shares saw an erosion of more than $12 trillion this month. The MSCI World Index added 1.9% to 849.46, snapping a two-day, 8.4% drop. Standard & Poor’s 500 Index gained 4.4%.
Volkswagen AG surged 93% to become the world’s biggest company in terms of market value. BP Plc, Air France-KLM Group also gained. US index futures climbed as well. As the surge in stock prices made higher-yielding currencies less attractive, the yen fell the most against the euro since January 2001. Money-market rates extended declines on
Tuesday.
The Bank of England said the work so far in containing the crisis should calm the banking system, but was cautious about the impact on the wider economy. It projected losses globally at $2.8 trillion.
?The instability of the global financial system in recent weeks has been the most severe in living memory,? said deputy governor John Gieve. Consensus among Fed watchers is for a half-point cut in rates to 1%, the lowest level since June 2004.