Gas price hike drives Sensex up 520 points
India’s stockmarkets went into a celebratory mood and posted their biggest single-day gain in the last 18 months led by energy sector stocks after the government on Thursday said it would double natural gas prices from April 1, 2014. The rupee, that plummeted to a record low against the US dollar on Wednesday, staged a strong rally to close the day at 59.39, gaining a massive 80 paise. its biggest single-day gain in nine months against the American greenback.
Led by Reliance Industries Ltd and Oil and Natural Gas Corporation, the Bombay Stock Exchange’s benchmark Sensex scaled above its psychological 19,000 level, gaining 519.86 points (2.75 per cent) to close the week at 19,395.81.
The Nifty climbed 159.85 points (2.81 per cent) to end the trading session at 5,842.20.
While the share prices of ONGC surged by three per cent, RIL ended the day by posting a hefty gain of 3.78 per cent.
Foreign institutional investors, which had remained net sellers of equities throughout this month, went on a shopping spree, picking up stocks worth `1,124.31 crores, provisional data from the exchanges showed.
“The markets staged a strong rally as the surprise announcement by the government on gas price hike led to a huge short covering in the derivatives segment,” said Arun Kejriwal, director, Kejriwal Research and Investment Service. However, he warned the underlying sentiment still remains cautious and the markets would need a slew of additional reform announcements by the government to sustain their winning momentum.
“The lower-than-expected current account deficit figures along with Thursday’s RBI norms on ‘currency bets by the FIIs’, which require prior consent of the central bank, triggered a positive rally in the rupee,” said Abhishek Goenka, chief executive officer of India Forex Advisers.
Forex participants feel the new norms announced by the RBI will help check excessive speculation in the rupee, that will help reduce the high volatility in the currency.
India’s volatility index, also known as the fear index, that measures investor expectations about the near term, dropped 4.77 per cent on the National Stock Exchange, signalling a slight improvement in sentiment. “We believe the domestic economy is gradually improving and the fundamentals are being put in place. The volatility in markets continues to be driven by the FII liquidity directions. The stabilisation of the rupee is of importance as it leaves the central banker an opportunity to refocus on growth through monetary easing,” said a note by Kotak Mutual Funds.
On Friday, the market breadth, that indicates the overall health of the market, remained strong with 1,538 stocks on the BSE registering strong gains, compared to just 858 stocks that ended deep in the red.
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