MUMBAI, May 15 (Reuters): The BSE Sensex and the Nifty surged around 2.5 per cent on Wednesday to their highest close since January 2011, as lenders such as HDFC rallied after the RBI governor said he had taken note of falling inflation, reinforcing bets about future rate cuts.
ICICI Bank rose 3.82 per cent, while HDFC Bank Ltd gained 3.74 per cent.
The BSE Sensex gained 2.49 per cent to its highest close since January 2011, posting its biggest single day percentage gain since June 2012.
The 50-share Nifty ended up 2.52 per cent, posting its biggest single day gain since September 2012.
Meanwhile, Economic Times says: The S&P BSE Sen sex and the Nifty extended intranet gains towards the end of the session on Wednesday as foreign institutional investors pumped in dollars on hopes of interest rate cuts by the Reserve Bank of India (RBI) at its policy meet next month.
India's headline wholesale inflation eased below 5 per cent in April, dropping within the central bank's comfort zone for the first time in more than three years.
"We expect the RBI to cut policy rates 25bp on June 17 and have preponderated another 25bp rate cut to July 30 from October. To improve bank liquidity to soften lending rates, the RBI should continue to OMO (Rs 1600 billion BAMLe) in FY14, assuming 50bp CRR cut in 2HFY14," said Bank of America Merrill Lynch report.
"In response, we expect banks to cut lending rates by 25bp now (and 50bp by September). At the same time, the RBI may persist in their hawkish talk until they have clarity on the rains," the report added.
The 30-share index registered its biggest gain in terms of points in at least one year to close at 20,215.30, up 493.01 points or 2.50 per cent. It touched a high of 20,241.96 and a low of 19,798.18 in trade today.
The Nifty closed at 6,142.25, up 146.85 points or 2.45 per cent. It touched a high of 6,157.10 and a low of 6,018.85 in trade today.
The S&P BSE Midcap Index was up 1.59 per cent and the S&P BSE Smallcap Index was 0.96 per cent higher.
Among the sectoral indices, the S&P BSE Bankex surged 4.04 per cent, the S&P BSE Realty Index rallied 4 per cent, the S&P BSE Capital Goods Index gained 3.17 per cent, the S&P BSE Oil & Gas Index was up 2.22 per cent and the S&P BSE Auto Index was 2.05 per cent higher.
"We have seen a big divergence in the performance of the private sector banks and the public sector banks. The valuations obviously of the public sector banks are much better and there is also expectation that the rates will continue to be cut throughout the year," said Punita Kumar Sinha, Managing Partner, Pacific Paradigm Advisers to ET Now.
"Also, hopefully the economy will recover so based on all of those factors there is still value in the financials but one will have to be very selective because of the valuation gap between the different companies," she added.
HDFC (4.70 per cent), SBI (4.07 per cent), Larsen & Toubro (3.85 per cent), ICICI Bank (3.80 per cent) and HDFC Bank (3.72 per cent) were among the top Sensex gainers.
Wipro (0.53 per cent) was the only index loser.
Market breadth was positive on the BSE with 1,466 gainers against 973 losers.
Foreign institutional investors (FIIs) bought shares worth Rs 4.21 billion while domestic institutional investors sold equities worth Rs 4.13 billion on Monday as per the provisional data from the National Stock Exchange
ICICI Bank rose 3.82 per cent, while HDFC Bank Ltd gained 3.74 per cent.
The BSE Sensex gained 2.49 per cent to its highest close since January 2011, posting its biggest single day percentage gain since June 2012.
The 50-share Nifty ended up 2.52 per cent, posting its biggest single day gain since September 2012.
Meanwhile, Economic Times says: The S&P BSE Sen sex and the Nifty extended intranet gains towards the end of the session on Wednesday as foreign institutional investors pumped in dollars on hopes of interest rate cuts by the Reserve Bank of India (RBI) at its policy meet next month.
India's headline wholesale inflation eased below 5 per cent in April, dropping within the central bank's comfort zone for the first time in more than three years.
"We expect the RBI to cut policy rates 25bp on June 17 and have preponderated another 25bp rate cut to July 30 from October. To improve bank liquidity to soften lending rates, the RBI should continue to OMO (Rs 1600 billion BAMLe) in FY14, assuming 50bp CRR cut in 2HFY14," said Bank of America Merrill Lynch report.
"In response, we expect banks to cut lending rates by 25bp now (and 50bp by September). At the same time, the RBI may persist in their hawkish talk until they have clarity on the rains," the report added.
The 30-share index registered its biggest gain in terms of points in at least one year to close at 20,215.30, up 493.01 points or 2.50 per cent. It touched a high of 20,241.96 and a low of 19,798.18 in trade today.
The Nifty closed at 6,142.25, up 146.85 points or 2.45 per cent. It touched a high of 6,157.10 and a low of 6,018.85 in trade today.
The S&P BSE Midcap Index was up 1.59 per cent and the S&P BSE Smallcap Index was 0.96 per cent higher.
Among the sectoral indices, the S&P BSE Bankex surged 4.04 per cent, the S&P BSE Realty Index rallied 4 per cent, the S&P BSE Capital Goods Index gained 3.17 per cent, the S&P BSE Oil & Gas Index was up 2.22 per cent and the S&P BSE Auto Index was 2.05 per cent higher.
"We have seen a big divergence in the performance of the private sector banks and the public sector banks. The valuations obviously of the public sector banks are much better and there is also expectation that the rates will continue to be cut throughout the year," said Punita Kumar Sinha, Managing Partner, Pacific Paradigm Advisers to ET Now.
"Also, hopefully the economy will recover so based on all of those factors there is still value in the financials but one will have to be very selective because of the valuation gap between the different companies," she added.
HDFC (4.70 per cent), SBI (4.07 per cent), Larsen & Toubro (3.85 per cent), ICICI Bank (3.80 per cent) and HDFC Bank (3.72 per cent) were among the top Sensex gainers.
Wipro (0.53 per cent) was the only index loser.
Market breadth was positive on the BSE with 1,466 gainers against 973 losers.
Foreign institutional investors (FIIs) bought shares worth Rs 4.21 billion while domestic institutional investors sold equities worth Rs 4.13 billion on Monday as per the provisional data from the National Stock Exchange
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