Sensex gains 400 points on BoJ move

Bank of Japan adopts negative interest rate policy; FIIs buy Indian shares worth about Rs 570 crore

Indian markets rallied nearly two per cent on Friday, after the Bank of Japan (BoJ) moved to negative interest rates to stimulate the country's economy.

Tokyo's central bank hopes that by imposing a 0.1 per cent fee on selected current account deposits, commercial banks will be encouraged to make more loans and so stimulate economic growth. Global shares jumped and the yen slumped on Friday after BoJ's bold step to re-inflate world's third-largest economy.

Following the global cues, the 30-share Sensex galloped 400 points to end at 24,870.69, up 1.64 per cent. NSE's Nifty 50 gained 1.87 per cent to close at 7,563.55. The gains helped the benchmark indices pare their biggest monthly loss since August to 4.8 per cent and also ended their three-week losing streak. The BoJ move came after the European Central Bank signalled it could increase stimulus in March. Also, investors were hopeful that the US Federal Reserve will not raise borrowing costs again this quarter.

Most Asian markets were up between two and three per cent. Shanghai was up 3.09 per cent while Nikkei closed 2.8 per cent up on Friday. Foreign investors were net buyers of shares worth nearly Rs 570 crore on Friday, provisional data showed.

The sharp recovery in global oil prices also boosted investor sentiment towards risky assets like emerging market equities. "Recovery in crude oil prices will augur well for the market in current scenario," said S Naren, chief investment officer, ICICI Prudential AMC.

Sensex's 4.8 per cent decline in January is the worst monthly start to any year since 2011, when the gauge had declined nearly 13 per cent. Last week, the index had declined to its lowest level since May 15, 2014 as foreign investors pulled out around $1.8 billion from the markets spooked by the rout in Chinese shares and oil prices.

"The Nifty started the fresh derivatives expiry series on a strong note and is now suggesting a probable near-term revival. The nearest resistance at 7,500 is broken and now a move beyond 7,620 is required to improve the trend further," said Siddhartha Khemka, head of research at Centrum Wealth. However, he added, "Global market still remains in a range of caution and a sustained move may be required to improve their overall positioning in the near term."

On Friday, BSE Consumer Durable Index was the biggest gainer at 3.26 per cent followed by Healthcare Energy, which gained over two per cent each. Of 30 stocks in the Sensex, 25 ended in green with shares of Coal India, Sun Pharma and Hero MotoCorp gaining more than 4.6 per cent.

Fast-moving consumer goods giant Hindustan Unilever, pharma major Dr Reddy Laboratories and two-wheeler maker Bajaj Auto gained about 3.2 per cent in the stock market.

However, banking heavy weights - State Bank of India and ICICI Bank - were among the biggest losers as the value of their shares declined 2.9 per cent and 1.2 per cent, respectively. Tata Steel, Bharti Airtel and NTPC were among the other losers in Friday's trade.

Of the 50 stocks of Nifty, 39 counters gained while 10 were losers. Nifty at above 7,500-level has made market participants bullish in the near term.