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BW Businessworld

Bernanke Boost: Sensex Surges 2% On US Fed Comments

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The key S&P BSE Sensex surged 2 per cent on Thursday, 11 July to close at a six-week high of 19,676.06, tracking global stock markets that were boosted by US Federal Reserve Chief Ben Bernanke's comments on continuing monetary stimulus. Blue chips such as HDFC Bank staged a broad recovery from recent falls on hopes that US monetary stimulus would not end as early as feared.

Federal Reserve Chairman Ben Bernanke said on Wednesday the US central bank would continue to pursue an accommodative monetary policy as inflation remained low and the unemployment rate might be understating the weakness of the labour market.

That helped ease concerns about foreign selling that have hit Indian markets. Overseas investors have sold a net Rs 10,080 crore of shares since the start of June.

Read Also: Asian Shares Hit Nearly 4-Week High On Bernanke's Comments
Still, some caution also prevailed ahead of Infosys Ltd earnings due on Friday, which will kick off the blue chip reporting season, and data on industrial production and consumer prices also due on Friday.

The 30-share gauge opened higher, following firm Asian cues, and rallied to 19,723.51. At the close, it added 381.94 points to 19,676.06, the highest level since 19,760.30 reached on May 31. It dropped 0.75 per cent on 10 July.

The broader Nifty index on the National Stock Exchange gained 118.40 points, or 2.04 per cent, to close at 5,935.10.

The SX40 index of the MCX-SX closed 211.03 points, or 1.83 per cent, higher at 11,744.81.

Investors were richer by nearly Rs 1 lakh crore as overall 1,358 stocks rose while 974 declined on the BSE platform.

"Indian markets rallied strongly, propelled by comments from Mr Bernanke," said Sanjeev Zarbade, Vice President - Private Client Group Research, at Kotak Securities. "Going ahead, we have the Infosys numbers. While the recovery in markets is comforting, crude oil has again firmed up...We remain concerned on this front.

The rupee, which rose to a one-week high in early trade, erased those gains to close marginally weaker at 59.67 against the dollar.

Overall, 12 of the 13 sectoral indices gained, adding between 0.55-3.00 per cent, with metals, banking, realty, capital goods, refinery and PSU segments taking the lead.

The major Sensex gainers included HDFC Bank, ITC, HDFC, TCS, Reliance Industries, ICICI Bank, L&T, ONGC, Bharti Airtel, Infosys and SBI.

L&T closed 2.65 per cent up as the stock turned ex-bonus.

Speaking on his expectations for Infosys earnings, Amar Ambani, Head of Research at IIFL, sees Infosys posting a net sales of Rs 10,855 crore, gain of 3.8 percent quarter- on-quarter (QoQ). On the operating profit margin front, he expects the IT major to post a 1.1 per cent QoQ fall.

Kishor P Ostwal, CMD, CNI Research Ltd. said: "Nifty closed near 5940 which is technically in buy mode. Infosys result which is lined up before market could create scary position on either side. Results could be in line but guidance will either spook Infosys and Nifty or could boost them...If Infosys disappoints, it may fall 8 to 10 per cent."

Asian stocks closed sharply higher on Bernanke's comment.

Key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan rose by 0.39 per cent to 3.23 per cent.

European markets too were trading higher in early trade.

France's CAC was up by 0.70 per cent, Germany's DAX by 1.05 per cent and the UK's FTSE by 0.82 per cent. US index futures too were indicating firm opening today.

In the domestic market, 27 of the 30 shares from the Sensex pack closed with gains while Maruti Suzuki, Wipro and Cipla finished with losses.

Major gainers were Sterlite Ind (4.78 per cent), Hindalco Ind (4.74 per cent), HDFC Bank (3.32 per cent), Bharti Airtel (3.21 per cent), Hero Motocorp (3.27 per cent), CIL (3.21 per cent), TCS (3.10 per cent), HDFC (2.86 per cent), ONGC (2.68 per cent), L&T (2.65 per cent) and Tata Power (2.26 per cent).

ITC (2.17 per cent), Tata Steel (1.97 per cent) and ICICI Bank (1.91 per cent), Gail India (1.79 per cent), SBI (1.74 per cent), RIL (1.64 per cent), NTPC (1.63 per cent), Dr Reddy's Lab (1.41 per cent), Jindal Steel (1.39 per cent) and Sun Pharma (1.30 per cent) also notched up good gains.

However, Maruti lead losers with a drop of 2.43 per cent.

Among the sectoral indices, S&P BSE-Metal rose by 3.00 per cent, followed by S&P BSE-Bankex (2.48 per cent), S&P BSE-Realty (2.44 per cent), S&P BSE-CG (1.84 per cent), S&P BSE-Refinery (1.8 per cent), S&P BSE-PSU (1.77 per cent), S&P BSE-Teck (1.52 per cent), S&P BSE-Power (1.51 per cent), S&P BSE-FMCG (1.44 per cent) and S&P BSE-IT (1.43 per cent).

Total turnover dropped to Rs 1,433.15 crore from Rs 1,619.83 crore yesterday. Meanwhile, Foreign institutional investors bought shares worth Rs 75.46 crore yesterday as per provisional data with stock exchanges.