Expectation of a rate cut this week by the Reserve Bank of India (RBI), coupled with declining inflation numbers and strong cues from the global markets, led the Indian bourses to end in the positive terrain on Thursday.

The 30-share Sensex of Bombay Stock Exchange (BSE) added 482.32 points, or 5.51%, and closed at 9,229.75 points. Indian markets opened with a positive gap, but swiftly turned choppy due to weak cues from some of the Asian markets. The market later managed to gain ground and, during the final hours of trading rebounded, from the day’s low on genuine buying across all sectors in the BSE.

Dealers in the market said stocks extended their gains and continued to add momentum on eased inflation and hopes of a stimulus package. The inflation rate decreased to 8.40% for the week ended November 22, 2008 compared to 8.84% last week. The broader S&P CNX Nifty of National Stock Exchange gained 131.55 points, or 4.95%, and ended the day at 2,788 points.

Alex Mathew, head, research centre, Geojit Financial Services Ltd, said, “The domestic markets opened on a flat to positive note on the back of good cues from the global markets. But, later, during the intra-day trade, markets picked up momentum on news that the central bank is considering a cut in the repo and reverse repo rates this weekend; further, banks in Europe have decided to cut interest rate, which gave a boost to the European markets reflecting those gains on our bourse too.”

Some dealers said that the market is expecting around Rs 15,000 crore from the government to support the infrastructure sector along with measures for the housing, automobile and export sectors. An analyst from a leading broking house said, “We only witnessed a relief rally; global cues are still an anxiety for Indian markets. I think this is a time when India needs some smart measures from the government to lift sentiments of the investors.”

All the sectors in the BSE sectoral indices ended the day with huge gains, after hopes that a new package may be announced for infrastructure projects in due course.

The breadth of the market remained positive for the entire trading session, as out of 2,231 stocks traded on BSE, 1,503 stocks advanced, 668 stocks declined and 60 remained unchanged. In the Sensex, all 30 stocks ended the day in green.

However, some market players feel that it will take a few more months for the conditions of Indian markets to improve, but for the short-term period, the markets might remain volatile.

Late rally

• Markets here opened with a positive gap, but turned choppy due to weak cues from some Asian markets

• They rebounded during the final trading hours on genuine buying across all sectors in the BSE

• Out of 2,231 stocks traded on the BSE, 1,503 advanced, 668 declined, 60 remained unchanged

• The Sensex added 482.32 points, or 5.51%, and closed at 9,229.75