Mumbai: 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 May 3 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 percent, 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 percent 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 Tuesday closed 2 percent higher after CERC allowed it to raise power tariffs to compensate for an unexpected increase in coal cost.
However, stocks of gold finance companies remained under pressure with Mannappuram Finance and Muthoot Finance dropping by nearly 10 percent 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 percent in 2016-17. "India will reduce the fiscal deficit until we reach the target of 3 percent in 2016-17 or perhaps a little earlier," he said yesterday in Canada.
Stock markets today saw buying across-the-board as 11 out of 13 sectoral indices closed with gains in 0.72-2.94 percent range. The Bankex, Auto, Capital Goods, Power and Realty indices were the forefront while only S&P BSE-IT and S&P BSE-Teck closed lower. Overall, 28 out of 30 Sensex-based scrips ended with gains. Infosys and Sterlite closed down.
"The recent deceleration of gold and crude prices is also constructive for macros since these items account for about 40-45 percent of our total imports and a correction is likely to lend a favorable bias to the current account deficit, which is one of our key concern areas," said Lalit Thakkar, Managing Director - Institution, Angel Broking.
Globally, Asian stocks reversed their intra-day losses and closed mixed with upward bias. Key indices from China, Singapore, South Korea and Taiwan settled with gains while from Hong Kong and Japan concluded with losses.
However, European markets were trading lower in their early trade on worries over the global economic growth. France's CAC was down by 0.70 percent, Germany's DAX 0.68 percent and the UK's FTSE by 0.66 percent.
Back home, Maruti Suzuki was the top gainer from the Sensex pack with a rise of 4.23 percent. M&M, ONGC, HDFC, Dr Reddy's Lab, Hero MotoCorp, HDFC Bank, L&T, ICICI Bank, ITC, Bajaj Auto, NTPC, Sun Pharma, HUL, BHEL, Tata Power, Bharti Airtel, Hindalco, SBI, RIL, Tata Steel and Gail India clocked smart gains in 1.13-3.95 percent range.
Market breadth remained positive as 1,338 scrips finished higher while 1,022 ended lower. Total turnover moved down further to Rs 1,889.42 crore from Rs 1,931.84 crore Monday.
Meanwhile, Foreign Institutional Investors (FIIs) sold shares worth Rs 418.37 crore Monday as per provisional data with stock exchanges.
First Published: Tuesday, April 16, 2013, 10:30