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Sensex zooms 387 pts to 7-month high, investors gain over Rs 1 lakh crore

The BSE benchmark Sensex on Tuesday zoomed by nearly 390 points, its biggest gain in seven months, to close at 18,744.93 on heavy buying by FIIs on hopes of aggressive rate cut by RBI and expectations of a lower fiscal deficit on account of falling prices of crude oil and gold.

The 30-share Sensex opened at 18,356.32 and fell to the day's low point of 18,325.73 on initial selling tracking overnight losses in US markets.

However, fresh fund infusion by FIIs on talks of lower fiscal deficit and a possible 50 basis point rate cut by RBI on 3 May after lower-than-expected inflation numbers helped the sentiment recover, traders said.

Led by banks, auto, capital goods and power shares, the Sensex surged to day's high of 18,771.33 and finally settled at 18,744.93 -- a gain of 387.13 points or 2.11 per cent, the biggest jump since 403.58-point rise in September 2012.

The NSE 50-share Nifty also ended higher by 120.55 points or 2.16 per cent to finish at 5,688.95. Across the market, investor welath rose by over Rs 1 lakh crore to Rs 64.24 lakh crore as nearly 1,400 stocks rose.

'Market is seen discounting falls in gold and crude oil prices that are likely to bring down current account deficit (CAD). Also, lower-than-expected inflation has raised hopes for RBI to cut key interest rates,' said Nidhi Saraswat, Senior Research Analyst, Bonanza Portfolio.

ICICI Bank, HDFC, HDFC Bank and SBI saw good buying on rate cut hopes. Similarly, Maruti Suzuki, Tata Motors, M&M, Hero Motocorp and Bajaj Auto registered smart gains.

Oil and gas related stocks like ONGC and RIL rose further after Brent crude oil fell today in London market. RIL is expected to post Q4 earnings later in the day.

Tata Power on Tuesday closed 2 per cent higher after CERC allowed it to raise power tariffs to compensate for an unexpected increase in coal import costs. However, stocks of gold finance companies remained under pressure with Mannappuram Finance and Muthoot Finance dropping by nearly 10 per cent each.

Overturning fears of foreign investors about fiscal deficit, Finance Minister P Chidambaram has said India was committed to reducing its fiscal deficit and would achieve the target of 3 per cent in 2016-17. ‘India will reduce the fiscal deficit until we reach the target of 3 per cent in 2016-17 or perhaps a little earlier,’ he said on Monday in Canada.


Snapping a two-day downtrend, the rupee on Tuesday rose by a staggering 48 paise to end at a one month high level of 54.14 against US dollar on robust FII inflows and hopes of lower CAD due to falling oil prices.

A sluggish dollar overseas also helped the rupee mark its best gain in 3 months today as brent crude oil fell below $100 a barrel for the first time since July. The rupee commenced slightly weak at 54.65 a dollar from previous close of 54.62 at the Interbank Foreign Exchange (Forex) market and eased further to a low of 54.66.

Later, it bounced back on rally in stock markets to a high of 54.12 before closing at one-month high of 54.14, a net rise of 48 paise or 0.89 pct. Previously, rupee had settled at 54.01 on 15 March 2013. Hopes of a 50-basis point rate cut by the RBI in its monetary policy meet on May 3 after sharp fall in headline as wella s retail inflation also boosted the rupee sentiment, a forex dealer said.

The dollar index, a gauge of six major global rivals, was down by 0.24 per cent on worries over global growth and steep fall in gold prices.

Recent deceleration of gold and crude prices is also constructive for macros since these items account for about 40-45 per cent of our total imports and a correction is likely to lend a favourable bias to Current Account Deficit .

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: ‘Rupee ended strong by almost 0.9 per cent taking cues from positive equity markets. Rupee is expected to trade within 54.0054.50 levels. The dollar index, a measure against a basket of six major currencies, traded high at 82.51 from 82.318 late Monday.’
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