Mumbai: The benchmark BSE Sensex rebounded by 374 points today to reclaim the 27,000-mark on heavy buying in banks, consumer goods and auto stocks on rate cut hopes triggered by drop in inflation and IIP numbers.
Short-coverings by participants at lower levels, recovery in rupee and firm global cues helped the Sensex bounce back after yesterday's 630-point plunge.
The upside was also supported by gains related to inclusion of some stocks in MSCI India index. MSCI Inc announced that eight companies including Bharti Infratel, Eicher Motors, Lupin and Bharat Forge will be added to the list.
At present, companies such as Infosys, HDFC, TCS, RIL, Sun Pharma and ITC are part of MSCI India index. Retail inflation, which cooled to a four-month low in April and industrial output growth slipped to a five-month low in March, increased changes of an interest rate cut by the Reserve Bank at its next meeting.
“Latest CPI trajectory provides scope to cut rate by the next RBI meet in June 2. This is likely to provide a support to the range-bound correction led by FIIs due to global factors,” said Vinod Nair, Head of Fundamental Research at Geojit BNP Paribas Financial Services.
In volatile movements, the 30-share Sensex opened firm and regained the crucial 27,000-mark to touch the day's high of 27,299.80 led by gains in rate-sensitive stocks. On emergence of profit-booking it slipped into negative zone to touch day's low of 26,750.01.
Meanwhile, HSBC today changed its stance on the country to “underweight”, saying corporate earnings may remain muted, monsoon could be weak and odds are against rate cuts.
Discounting HSBC downgrade, Sensex staged a strong comeback towards the middle of session and settled the day 373.62 points or 1.39 per cent higher at 27,251.10.
The 50-share NSE Nifty also ended above the 8,200-level by surging 108.50 points or 1.34 per cent to 8,235.45 after shuttling between 8,254.95 and 8,089.80 intra-day. Meanwhile, market is now waiting for the data on inflation based on the wholesale price index (WPI) for April, which will be announced tomorrow.
Besides banking and capital goods and auto indices, power, oil&Gas, FMCG and consumer durable notched gains, while realty fell on profit-booking.
Indices in Japan, Singapore, South Korea and Taiwan moved up by 0.35 to 0.83 per cent, while those in China and Hong Kong declined each by 0.59 per cent.
European stocks were trading higher ahead of the release of first quarter GDP growth data for the euro zone. Key indices in France, Germany and the UK firmed up by 0.63 to 1.35 per cent.
“Though during the day indices collapsed and gave up all it gains as HSBC downgraded Indian equities to underweight from overweight. After the immediate reaction, investors overlooked the situation and helped indices to add over 1 per cent as blue-chip companies ended higher on value buying,” said Jignesh Chaudhary, Head Of Research at Veracity Broking Services.
Out of of 30 Sensex stocks, 22 ended in the positive zone. Major gainers on the index were Axis Bank 4.95 per cent, GAIL 3.08 per cent, ICICI Bank 2.88 per cent, SBI 2.52 per cent, M&M 2.48 per cent, HDFC 2.38 per cent, BHEL 2.27 per cent, Tata Power 2.24 per cent and Larsen 2.02 per cent.
However, Hindalco fell by 2.91 per cent, NTPC 2.47 dropped per cent and Bharti Airtel slipped 2.30 per cent. Among the BSE sectoral indices, bankex rose by 2.64 per cent, followed by consumer goods 1.81 per cent, auto 1.72 per cent, power 1.29 per cent, oil&gas 1.27 per cent and healthcare 1.12 per cent.
The market breadth turned negative as 1,639 stocks ended higher, 1,059 stocks finished lower, while 118 ruled steady. The total turnover rose further to Rs 3,545.28 crore from Rs 3,142.70 crore yesterday.