Sensex at 32-month high, rate-sensitives rally

Benchmark indices continue to remain firm on significant buying among financials and capital goods shares. Markets have reacted on a strong note after US Fed decided not to taper its asset-buying program. Fed said it needs to see more evidence of improvement in the US economy.

At 10:45 AM, the 30-share Sensex rose 542 points at 20,508 and the 50-share Nifty added 176 points at 6,076 levels. The Sensex and the 50-unit CNX Nifty have regained the psychological 20,000 mark and 6,000 levels, respectively. The Sensex hit its highest level in more than 32 months. The Nifty hit its highest level in more than 8 weeks.

Asian shares and currencies surged across the board on Thursday after the Federal Reserve stunned markets and decided not to taper its asset-buying programme now, sending global bond yields and the dollar into a tailspin.

From Jakarta to Manila, Tokyo to Sydney investors celebrated the prospect of prolonged stimulus in the world's largest economy. MSCI's broadest index of Asia-Pacific shares outside Japan jumped 2.2 percent to a four-month peak.

The rupee surged as much as 2.8 percent on Thursday, hitting its highest in a month, as the U.S. Federal Reserve's decision not to dial back its easy money policy is expected to provide a reprieve to the Reserve Bank of India (RBI) in its policy making.

On the sectoral front, BSE Bankex has zoomed by over 6% followed by counters like Realty, Auto, Capital Goods, PSU, Consumer Durable and Metal, all surging between 2-5%.

Banking stocks zoomed by about 7% as the US Federal Reserve announced its intention to leave its stimulus programme intact.

Analysts said that the move by Fed is expected to benefit banks the most on account of foreign currency loans taken by them.

"In the past 15 months or so, banks had taken huge exposure in terms of dollar loans from the external market. The continuing of the QE3 stimulus programme would mean higher demand for banking papers in the external market," said G Chokkalingam, ED & CIO, Centrum Broking.

The rally was led by banking stocks, which make for almost a fourth of India's benchmark Nifty and Sensex indices. While IT stocks, including TCS, HCL and Wipro opened with losses.

Shares of rate sensitive sectors such as automobiles, real estate, infrastructure and banking have rallied up to 17% on hopes that the Reserve Bank of India (RBI) may roll back its tightening measures taken in order to contain the forex volatility in its monetary policy review on tomorrow.

The National Stock Exchange (NSE), CNX Auto, CNX Realty, CNX Infra and Bank Nifty are up 3-7% as compare to less than 3% rise in benchmark index CNX Nifty at 1033 hours.

YES Bank, ICCI Bank and Axis Bank from banking, DLF, HDIL and Unitech from realty, Maruti Suzuki and Mahindra and Mahindra from automobiles are among few trading higher by over 4% each.

Recent announcement by RBI to prevent Rupee fall and higher financial market supported both the markets and INR gained nearly 8-10% against dollar from its recent low of 68.80 and now Rupee is trading near to 61.94 far away from an all time low.

Reliance Broadcast Network is trading lower by 3% at Rs 48.50, in otherwise strong market, after its board approved the delisting proposal subject to shareholders’ approval.

The market breadth in BSE remains positive with 1,076 shares advancing and 551 shares declining.