Sensex at 3-month high as RBI, US jobs data soothe markets

Shrugging off concerns around a weak rupee and a rise in crude oil prices, the Sensex closed at its highest level in more than three months on Monday, due to a softening in the yield of the 10-year gilt and tepid US jobs data.

Reversing two days of losses, the BSE benchmark gained 0.84 per cent, or 293 points, to close at 35,208, the highest since February 1. The broader Nifty 50 rose 0.92 per cent, or 97.25 points, to end at 10,715.5. Both the indices the rose most since April 5.

The gains were led by Reliance Industries, which rose 2 per cent after Brent crude oil prices topped $75 per barrel on Monday.

Bank stocks also rallied amid softening of the yield on the 10-year gilt, following the RBI’s open market operation announcement on Friday. The RBI on Friday said it would buy Rs 100 billion of securities with maturities ranging from 2020 to 2033 on May 17. The Bank Nifty rose 0.82 per cent, while the Nifty PSU Bank index rose 2 per cent. Most public sector bank stocks rallied, led by Punjab National Bank, after the fraud-hit lender said it expected 10 per cent business growth in 2018-19.

Tractor manufacturer Mahindra & Mahindra (M&M) rose 4 per cent after its April sales rose 22 per cent. ITC gained 1.6 per cent on optimism that the rural economy will receive a boost from a good monsoon and election spending. Most global markets rose after US jobs data released on Friday eased fears of faster rate hikes by the Federal Reserve.

“Market gained momentum as the 10-year yield softened on the RBI’s open market operation announcement. Banks outperformed on hopes that the bond market will stabilise due to the RBI’s intervention. Sentiment also improved after tepid US jobs data raised hopes that the Fed will slow down its rate hike trajectory,” said Vinod Nair, head of research, Geojit Financial Services.

Foreign portfolio investors (FPIs) sold shares worth Rs 6.4 billion, while their domestic counterparts were net buyers to the tune of Rs 10.4 billion, provisional data provided by stock exchanges showed.