Sensex, Nifty end over 1% higher; key factors that led to mkt rally today

The 30-share index Sensex of BSE rallied 461 points or 1.35 per cent to settle at 34,761 while NSE's Nifty50 index reclaimed the crucial 10,450 level to shut shop at 10,460, up 159 points.

Markets made a solid comeback on Wednesday with the frontline indices Sensex and Nifty advancing over 1 per cent. 

The Sensex rallied 461 points or 1.35 per cent to settle at 34,761 while NSE's Nifty50 index reclaimed the crucial 10,450 level to shut shop at 10,460, up 159 points or 1.54 per cent. All the sectors except IT settled with decent gains. Nifty Bank index jumped 794 points or 3.24 per cent to 25,322.

The Nifty IT index cracked 1.47 per cent to 15,143, with 6 components in the red and 4 in the green.
 

Volatility index India Vix declined nearly 9 per cent to settle at 18.01.
 

Here's a look at key factors that led to much-awaited rebound in equities on Wednesday -

RBI’s liquidity enhancement measures

The Reserve Bank of India (RBI) Tuesday announced it will inject Rs 120 billion liquidity into the economy through the purchase of government bonds on October 11 to meet the festival season demand for funds. The auction to purchase government bonds is a part of the Open Market Operations (OMO) to manage liquidity in the system which seems to be facing liquidity tightness, said a PTI report. 

Oil prices slip

Oil prices slipped on Wednesday after the IMF lowered its global growth forecasts, but markets were supported as Hurricane Michael moved towards Florida causing the shutdown of nearly 40 per cent of US Gulf of Mexico crude production. Brent crude was down 20 cents at $84.80 a barrel by 0915 GMT after a 1.3 per cent gain on Tuesday. US light crude was down 15 cents at $74.81. 
 

Rupee recovers

The rupee on Wednesday opened 25 paise up at 75.14 against the US dollar. The domestic unit fell 33 paise on Tuesday to finish at a fresh lifetime low of 74.39 against on high crude oil prices, strengthening of the greenback and unabated foreign fund outflows. In a recent interaction with Business Standard, Ashutosh Tiwari of Equirus Securities, said, "We have witnessed this kind of fall in the past as well. Historically, if the rupee depreciates, it depreciates very sharply and then remains stable for three or four years. We have seen that during 2013- 2014 and the same thing is happening now. Hence, it may see a mild decline and then stabilise."
 

NBFCs on fire

Shares of non-banking financial companies (NBFC) logged big gains after a media report suggested that the State Bank of India’s (SBIs) loan portfolio buys will provide liquidity to NBFCs. Bajaj Finance, Dewan Housing Finance Corporation (DHFL), Centrum Capital, Shriram Transport Finance, Muthoot Finance, Equitas Holdings, Mahindra & Mahindra Financial Services and Cholamandalam Investment and Finance Company advanced in the range of 9 per cent to 18 per cent on the BSE.

Heavy buying in auto, banks and power companies

Heavy buying was witnessed in banks, auto and media sectors. Heavyweights ICICI Bank, Axis Bank, YES Bank, Maruti and SBI gained over 4 per cent. Power companies Tata Power, Adani Power and Essar Power surged in the trade amid reports an expert panel has recommended that fuel cost should be passed on to consumers prospectively and that the companies should have the option to extend power purchase contracts by 10 years. Adani Power surged a huge 30 per cent in the trade before closing at Rs 30, up 25 per cent.