Banks, global cues help Sensex climb up 521 points

Biggest gain in 5 months; ICICI top gainer among banks

Markets on Tuesday posted their biggest single-day jump in nearly five months, supported by strong global markets after weak US economic data dampened the prospects of a rate hike by the Federal Reserve this year.

The benchmark Sensex, which was hovering around a three-month low, rallied the most in Asia, led by gains in index-heavy banking stocks on easing bad loan concerns.

The benchmark Sensex gained 521 points, or 1.89 per cent, to close at 28,050.88, while the Nifty 50 index ended 157.5 points, or 1.85 per cent higher at 8,677.90. Both the indexes saw biggest single-day jumps since May 25.

Most global markets traded about a per cent higher amid rebound in commodity prices on the back of improved investor sentiment.

ICICI Bank gained 4.6 per cent, extending its two-day gains to 12 per cent.

The private sector lender, best-performer on the BSE Bankex, has gained on easing of non-performing asset (NPA) woes, following a deal by Essar Group to sell its refinery unit.

“Banking lifted the mood after the Essar Oil deal, which eases some NPA worries. The low inflation and expectations of further easing by the Reserve Bank of India has also changed the sentiment in the market,” said Vaibhav Agrawal, head of research, Angel Broking.

He added, “The market earlier saw nervousness over the geopolitical worries after the surgical strikes. However, there is no escalation, so this is also a rebound from the earlier decline. Overall, we see a strong market going forward as festive demand remains solid.”

After a terror attack on an army base in Uri, Kashmir killed 19 Indian soldiers, India claimed to have launched “surgical strikes” in terror bases across the Line of Control. This escalated tensions between India and Pakistan.

On Tuesday, Axis Bank gained 2.6 per cent, while HDFC Bank and the State Bank of India added 1.5 per cent, each.

Last week, the benchmark Sensex had declined to its lowest level since July after investors had turned cautious escalating tensions between India and Pakistan. A disappointing start to the earnings announcement by technology majors Infosys and Tata Consultancy Services (TCS) had weighed on investor sentiment. However, analysts are expecting corporate earnings to turn a corner.

“After two years of earnings disappointments, we believe quite a few Indian sectors are beginning to show signs of reaching ‘inflection points’ — consensus estimates beginning to move up after years of decline,” said Manishi Raychaudhuri, Asia Pacific equity strategist, BNP Paribas.

He added, “Domestic equity mutuals have received $25 billion since the Modi administration assumed office, and appear set to benefit from stronger flows in the absence of suitable attractive investment alternatives.”

Improvement in sentiment saw both foreign and domestic institutional investors were net-buyers to the tune of Rs 345 crore and Rs 173 crore, respectively.

“Markets rose sharply, led by supportive global market and bottom fishing after a fall over the past few days,” said Dipen Shah, head, private client group, Kotak Securities. “The US elections in November will also be an important event for the global markets. Apart from these, markets will see stock specific action coming from the quarterly results.”

The BSE mid-cap index gained 1.9 per cent, most in two weeks, while the BSE small-cap index underperformed gaining just 1.3 per cent. All sectoral indices of the BSE ended with gains, with major BSE Bankex and BSE Capital Goods indices gaining the most.