Sensex soars 1,041 points, Nifty nears 17,000 as bulls regain footing

New Delhi: Extending gains for the second straight session, equity benchmark Sensex jumped by nearly 2 per cent to soar past the 56,000-mark on Thursday, propelled by robust buying in finance, banking and IT stocks. Value-buying persisted in blue chips as well as select mid- and small-cap counters after their recent spell of weakness, traders said.

A strong recovery in the rupee further boosted domestic equities despite the US Federal Reserve hiked rates to tame inflation, they added.

The US Federal Reserve on Wednesday raised key interest rates by 75 basis points for the second straight month. 

The 30-share BSE benchmark jumped 1,041.47 points or 1.87 per cent to settle at 56,857.79. During the day, it rallied 1,097.9 points or 1.96 per cent to 56,914.22.

The broader NSE Nifty advanced 287.80 points or 1.73 per cent to 16,929.60.

The Nifty rose sharply after the US Fed's comments hinting at a possibility of a slower pace of monetary tightening, Deepak Jasani, Head of Retail Research, HDFC Securities, said.

"...Stocks rose on Thursday as the prospect of a slower pace of Federal Reserve monetary tightening filtered across global markets. European shares came off session highs on Thursday, as a slew of downbeat earnings took the shine off a global rally driven by easing worries about the future pace of US interest rate hikes," he added.

Among the Sensex constituents, Bajaj Finance rallied the most by 10.68 per cent, followed by Bajaj Finserv that jumped 10.14 per cent after encouraging June quarter earnings.

The other gainers were Tata Steel, Kotak Mahindra Bank, IndusInd Bank, Infosys, Tech Mahindra and Nestle.

On the other hand, Bharti Airtel, UltraTech Cement, Dr Reddy's, ITC and Sun Pharma were the laggards.

In the broader market, the BSE midcap gauge jumped 0.94 per cent and smallcap index climbed 0.65 per cent.

A total of 1,902 stocks advanced, while 1,427 declined and 150 remained unchanged.

Among the BSE sectoral indices, IT jumped the most by 2.51 per cent, followed by finance (2.21 per cent), teck (2.19 per cent), realty (2.03 per cent) and bank (1.72 per cent).

Telecom was the only laggard.

The rupee appreciated 26 paise to close at 79.65 (provisional) against the US dollar on Thursday.

In Asia, markets in Seoul, Shanghai and Tokyo ended higher, while Hong Kong settled in the red.

"Indian benchmark indices outperformed their Asian peers on the last day of the current month expiry, as there was no surprise in the rate hike decision by the US Federal Reserve which came on expected lines, fuelling a rally in the US markets. The upbeat mood also had a rub-off effect on the domestic market, leading to buying in banking, IT, metals and realty stocks.

"Investors feel that RBI too may not spring any major surprise in the next week's monetary policy meeting on hopes inflation will see a downward curve going ahead," Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said.

Markets in Europe were trading lower during mid-session deals. The US markets had ended sharply higher on Wednesday.

"Positive cues from global markets following the Fed policy outcome, as well as domestic large caps' upbeat earnings, drove the market rally. The Fed's decision was as expected, while their positive comment dismissing the possibility of a recession and hinting at a slower pace of rate hikes in the coming months boosted global sentiments," said Vinod Nair, Head of Research at Geojit Financial Services.

"The market is taking cues from the Fed chief's statement that 'I don't think we are in a recession now, the labour market continues to be tight'. Data - unemployment at 50-year lows and job vacancies at historical highs- supports the Fed chief's view. In brief, the market is responding to the possibility of a soft landing for the US and the global economy.

"In India, relentless FII selling had emboldened the bears to go short. The market surge that we are witnessing now is partly short covering and partly investment buying in segments that are doing well," VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

Meanwhile, international oil benchmark Brent crude climbed 1.36 per cent to USD 108.1 per barrel.

Foreign institutional investors were net sellers in the capital markets as they offloaded shares worth Rs 436.81 crore on Wednesday, as per exchange data.

"Dalal Street staged a spectacular rebound, echoing global stock markets' optimism amidst oversold conditions, with Fed's decision to hike rates by 75 bps gave Nifty bulls a signal to rise.

"The positive takeaway was that the benchmark Nifty and many momentum stocks shined all throughout the day. The buying stampede simply continued," Prashanth Tapse - Research Analyst, Senior VP (Research), Mehta Equities Ltd, noted.