A receding global financial crisis and simmering of the domestic political imbroglio set a positive mood for the markets on Monday as benchmark indices posted their third-biggest gain of calendar 2007. The 30-share Sensex of the BSE surged 417.51 points (2.89%) to close at 14,842.38 points, while the broader 50-share S&P CNX Nifty of the NSE gained 112.45 points (2.68%) to close at 4,302.60 points.
Sanjay Sinha, CIO, SBI Asset Management Company (AMC), said, ?The market today replicated the global scenario exactly the way it did when the markets were going down. The fear that the US subprime crisis would affect other risky assets like equities is also dying down. What also helped the domestic market boost its confidence is the lack of any negative news on the political front. Lower unwinding of the yen carry trade also added to the rise.?
Unwinding of the yen carry trade saw global funds liquidate their positions in major Asian markets, especially equity, to tide over the rising currency. A rising yen lowers gains from borrowing in Japanese markets and deploying funds in equity markets that offer strong returns. A lower unwinding, therefore, seems to have eased the Asian sell-off.
While other Asian markets witnessed a positive trend, the Indian market outperformed all of them. Hong Kong?s Hang Seng was the only other market in the region which came close to the gains posted by the two leading Indian indices, as it gained 2.86% (up 655.84 points) to close at 23,577.73 points. Other Asian markets gained in the range of 0.32-1.50%.
Overall, Asian markets began a strong recovery in the wake of a robust showing by the Dow Jones on Friday, gaining 43 points to close at 13,379 points, following the release of data that eased concerns that the subprime mortgage crisis would slow growth.
Anita Gandhi, head of institutional business, Arihant Capital Markets, said, ?Domestic institutions were buyers mainly of engineering and banking stocks.?