Mumbai: Equity markets staged a spectacular rally on Monday to hit a fresh all-time high as a strong rally in global stocks triggered aggressive buying in index heavyweights.
Sentiments in the global markets remained upbeat after US Federal Reserve chairman Jerome Powell said it would go for only a gradual interest rate hike as low unemployment rate in US is not putting any significant pressure on inflation as expected earlier. This eased concern regarding massive outflow of funds from emerging markets especially at a time when most of their currencies have weakened significantly against the dollar.
The Sensex soared 442.31 points or 1.16 per cent to close the session at 38,697.11 while the Nifty zoomed past the 11,700 level mark in the intra-day trade before ending the day at 11,691.95, gaining 134.85 points or 1.17 per cent.
Experts pointed out that lot of traders had created bearish bets ahead of the US Federal Reserve chairman’s speech at Fed’s annual symposium in Jackson Hole. They had to cover their short (bearish bets) positions after US Fed’s comment triggered strong rally in global stocks.
“Positive global developments coupled with stability in both the currency as well as crude oil prices gave investors enough reasons to participate in the equity markets,” said Abhijeet Dey, senior fund manager, equities, BNP Paribas Mutual Fund.
Apart from US Federal Reserve’s comment last week, he said the Peoples Bank of China’s (PBC) announcement to tweak its methodology for the fixing of Yuan’s daily mid point to stabilise the currency also lifted global investors sentiments.
According to the provisional data released by the stock exchanges, foreign portfolio investors (FPI) remained net buyers of domestic equities worth '252.52 crore.
The broader markets also participated in the rally with 1,432 stocks advancing as against 1,294 stocks that declined.
Financial sector stocks stole the limelight on Monday on rising hopes regarding quicker resolution of stressed assets in the banking system.
While the private sector lenders such as ICICI Bank, Yes Bank and Axis bank gained 2.97 per cent, 2.26 per cent and 1.63 per cent, the shares of state-owned State Bank of India surged 2.65 per cent.
