So far this month, foreign institutional investors (FIIs) have invested a net Rs 267 crore in Indian equities, compared with net sales of Rs 2,598 crore in November. As a result, the rupee has strengthened in the past six days to close on Wednesday at 49.02 a dollar, its strongest gain in five weeks. The FIIs? investment spell marks the longest stretch of net inflows that Indian equity markets have seen since September.
Armed with this support and the $8-billion fiscal and monetary stimulus announced by the government on Sunday, the BSE Sensex rose for the second consecutive day, closing at 9,654.90 points, a gain of 492.28 points. The climb was aided by strong cues from its Asian peers. Markets had already factored in the 19% drop in car sales announced by Siam.
The 5.37% rise in the 30-share Sensex included some intense buying in blue chip companies, say dealers. The realty sector outperformed the benchmark index, gaining over 12% as the top performer of the day. The broader S&P CNX Nifty of the NSE closed 144.25 points higher, or 5.18%, at 2,928.25 points.
Anish Jhaveri, CEO of Antique Stock Broking, said, ?It was surprising to see markets going northwards. I think that the stimulus package announced last week is a very small step. We might get one more package before the general elections, which would further boost the markets.?
Markets also rallied as bond yields fell to their lowest level in four years. The drop means demand for government paper rose from banks flush with liquidity. Demand for credit is expected to now pick up, spurring industrial growth.
An analyst from a leading broking house said, ?Indian markets also advanced on news of the $15-billion bailout plan for US automakers, and hopes that other governments would help out ailing industries.?