Sensex ends at nearly 3-year high, Nifty surges 200 pts

Benchmark indices have closed the session on a strong note led by financial and FMCG shares on expectation that fund flows into emerging markets including India would continue as the US Federal Reserve's surprisingly decided to continue its stimulus programme.

The US Federal Reserve late Wednesday surprisingly decided to continue with its $85 billion-a-month bond-buying program for at least another month sent.

The 30-share Sensex ended 684 points higher at 20,647 and the 50-share Nifty added 216 points at 6,116 levels. Sensex witnessed the biggest single day gain since May 2009 in absolute terms.  The 30-share Sensex hit the highest levels since November 2010. The 50-unit CNX Nifty hit 16-week high.

The broader markets underperformed the benchmark indices- BSE Midcap and Smallcap indices were up 1-2%. The market breadth in BSE ended healthy with 1,428 shares advancing and 998 shares declining.

GLOBAL MARKETS

Asian shares and currencies flew higher on Thursday after the Federal Reserve stunned markets by choosing not to taper its asset-buying programme for 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 2.3% to a four-month peak.

US stocks rallied to record highs on Wednesday after the Federal Reserve surprised investors and decided against trimming its bond-buying stimulus programme, which has fueled Wall Street's rally of more than 20% this year.

The Dow Jones industrial average was up 146.44 points, or 0.94%, at 15,676.17, according to the latest data. The Standard & Poor's 500 Index was up 20.67 points, or 1.21%, at 1,725.43. The Nasdaq Composite Index was up 37.94 points, or 1.01%, at 3,783.64.

Most market participants were expecting the central bank to begin a withdrawal of the bond-buying programme by about $10 billion a month.

RUPEE

The rupee surged 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. At 15:40 PM, the rupee was trading at 61.94 against dollar.

GOLD

Gold soared around 3% on Wednesday after the US Federal Reserve said it would continue buying bonds at an $85 billion monthly pace for now, surprising financial markets that were braced for a reduction in the central bank's economic stimulus.

Citing strains in the economy from tight fiscal policy and higher mortgage rates, the Fed decided against the tapering of asset purchases that investors had all but priced into stock and bond markets.

SECTORS

BSE Bankex and BSE Realty index surged between 5-7%. Sectors like Capital Goods, PSU, FMCG, Metal, Oil & Gas, Consumer Durables, Auto and Power gained between 3-4%. Infact, all the major BSE sectoral indices ended in safe zone.

STOCKS

Shares of rate sensitive sectors such as automobiles, real estate, infrastructure and banking rallied up to 25% 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.

YES Bank, ICCI Bank, SBI, HDFC Bank and Axis Bank from banking, DLF, HDIL and Unitech from realty, Maruti Suzuki and Mahindra and Mahindra from automobiles were among few trading higher by between 5-25%.

Banking stocks zoomed 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, MD & CIO, Centrum Broking.

Bharti Airtel rallied over 5% on reports that Singapore Telecommunications Ltd (SingTel), the largest foreign investor in the company pledges support to lead a consolidation drive of the local telecoms industry.

Other notable gainers are Tata Steel, Tata Power, L&T, ONGC and HUL.

This year's best performing sectors--information technology and consumer goods--underperformed as stocks in the high beta, rate sensitive sectors, including banking, realty and auto surged. Wipro was down by over 2%.

Shares of oil marketing companies such as BPCL, HPCL and Indian Oil, along with ONGC and GAIL India rallied by up to 8% after the Indian Rupee (INR) hits one month high against the US Dollar (USD) today.

State-owned downstream oil marketing firms, BPCL and IOC are most benefited by the strong INR to USD rates as their revenues are linked to USD, their EBITDA margins are thin (3%-5%) and they are highly leveraged.