Mumbai: Markets were in a jubilant mood on Wednesday with BSE Sensex zooming 490 points to close at 28-month high of 20,200 and NSE Nifty soaring over 150 points to 6,100- level on buying in realty, banks and auto shares after RBI's "happy" remark on falling inflation fuelled rate cut hopes.
Investor wealth, as measured by market capitalisation, surged by a staggering Rs 1.30 lakh crore as three stocks rose for fall of every two. This more than recovers Rs 1 lakh crore that was wiped off on across-the-board selling on Monday.
The Bombay Stock Exchange 30-share barometer today resumed higher and gradually rose to settle at 20,212.96, a rise of 490.67 points or 2.49 percent. Previously, it had concluded at 20,301.10 on January 5, 2011. Today's gain is the highest in percentage terms since June 2012.
NSE Nifty index jumped by 151.35 points or 2.52 percent to end at 6,146.75. Similarly, MCX-SX flagship index SX40 closed 245.6 points, or 2.10 percent, higher at 11,925.14.
"We certainly will take note of the softening of inflation and the external payments situation in the next mid-quarter policy statement on June 17," RBI Governor D Subbarao said in Frankfurt. He said he was happy to see that inflation has come down to below 5 percent.
Today's stock market rally has been partly fuelled by "heightened expectations" of further easing by the central bank going forward, said Sanjeev Zarbade, Vice President - PCTG Research, Kotak Securities.
Mortgage major HDFC, state-run SBI and private lender ICICI Bank were the star performers of the day with gains of 3.8-4.7 percent. Smart rise in RIL, ITC, L&T, Tata Motors, M&M and ONGC helped the trio together contribute over 400 points to the Sensex surge.
Besides interest-rate related stocks, PSU, refinery, pharma, metal and consumer durables also attracted buying.
Rate-sensitive S&P BSE-Realty was the biggest gainer among sectoral indices at 4.04 percent, followed by BSE Bankex (3.95 percent), BSE-CG (3.00 percent) and BSE-PSU (2.36 percent).
Higher advices from international markets, coupled with sustained capital inflows from foreign funds, also boosted the market sentiment. Foreign Institutional Investors (FIIs) bought shares worth Rs 1,646.95 crore as per provisional data from the stock exchanges.
Asian shares closed higher with Japan's Nikkei Average surging to a fresh five-and-half year high as Japanese exporters rallied on the yen's sharp slide. Key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan rose by 0.12 percent to 2.29 percent.
However, European markets were trading narrowly mixed after reports said GDP data of Germany just narrowly avoided contraction in the first quarter and France slipped into recession. The CAC was quoting up by 0.08 percent while the DAX was down by 0.10 percent and the FTSE by 0.22 percent.
US stocks rallied to record highs on Tuesday continuing an ascent driven by the Federal Reserve's easy monetary policy.
Moving back to the local market, 29 scrips out of the 30-share Sensex pack ended higher while Wipro ended down.
Major gainers from the Sensex pack were HDFC (4.70 percent), SBI (4.07 percent), L&T (3.85 percent), ICICI Bank (3.8 percent), HDFC Bank (2.72 percent), M&M (3.6 percent), Cipla (3.25 percent), Hindalco (2.7 percent), Reliance Industries (2.65 percent), ONGC (2.63 percent), Tata Motors (2.63 percent).
NTPC (2.15 percent), Bajaj Auto (2.14 percent), Maruti Suzuki (2.07 percent), ITC (2.01 percent), Dr Reddy's Lab (1.92 percent), Hero MotoCorp (1.89 percent), Coal India (1.80 percent), Bharti Airtel (1.64 percent), Sterlite Industries (1.58 percent), Tata Steel (1.53 percent) and BHEL (1.30 percent) also notched up smart gains.
"Lower inflation numbers coupled with ample liquidity flow from FIIs is helping the stock market to rise higher and sometimes even surprise," said Nagji K Rita, Chairman & MD, Inventure Growth & Securities.
Among the sectoral indices, besides realty, banking, capital goods (CG) and PSU - S&P BSE-Auto (2.29 percent), S&P BSE-Oil&Gas (2.19 percent) and S&P BSE-HC (2.04 percent) saw gains.
Total market breadth turned positive as 1,466 stocks closed with gains while 973 scrips finished with losses. 160 stocks ruled steady. Total turnover rose to Rs 2,277.27 crore from Rs 1,671.47 crore yesterday.