Sensex reclaims 18,000, closes near 7-mth high

German bailout fund nod, Fed monetary easing hope boost sentiment

The Bombay Stock Exchange (BSE) benchmark Sensex on Wednesday closed above the 18,000-mark for the first time since February 23, while the rupee also gained, as an approval by Germany’s top court to the Euro zone’s new bailout fund and hopes that the US Federal Reserve would ease monetary policy triggered a risk-on rally in global markets.

The 30-stock Sensex closed up 0.82 per cent, or 147 points, at 18,000.03. It has climbed four percent in the past six days, its longest gaining streak since January. The National Stock Exchange (NSE)’s Nifty jumped 0.76 per cent, or 41 points, to 5,431.

Rupee rose 12 paise, or 0.21 per cent, against the dollar over its previous to close at a three-week high of 55.23. The flows from foreign investors helped match dollar demand from domestic oil marketing companies, traders said.

HIGH ON HOPES
Global markets
ASIA	Sep 12	%chg*
Nikkei 225	8,959.96	1.73
Kospi	1,950.03	1.56
Hang Seng	20,075.39	1.10
Sensex	18,000.03	0.82
Nifty	5,431.00	0.76
EUROPE
DAX	7,367.64	0.79
CAC 40	3,559.68	0.63
FTSE 100	5,795.17	0.05
Europe till 1700 IST and America future Source Bloomberg Compiled by  BS Research Bureau

Foreign institutional investors (FIIs) net-bought shares worth Rs451 crore on Wednesday, provisional data on the BSE website showed.

Lower-than-expected gain in industrial output failed to dampen investors’ enthusiasm.

“Indian shares are rising on the back of global liquidity. Buying from domestic investors is not that encouraging. It’s not just India; other emerging markets are also seeing good portfolio flows,” said Motilal Oswal Financial Services Joint Managing Director Raamdeo Agrawal.

The approval of the Euro700-billion European Stability Mechanism (ESM) was crucial to boosting the Euro zone’s crisis-fighting powers and a key requirement for the European Central Bank (ECB)’s new plan to buy the bonds of struggling euro members.

Investors heaved a sigh of relief that the ESM could finally take effect, after months of delay, with its ability to buy bonds directly from governments — the ECB can only buy from bond holders — and help recapitalise struggling banks.

A two-day Federal Reserve policy meeting starts on Wednesday. Markets widely expect some monetary stimulus to boost the US economy, helping brighten a gloomy demand outlook.

Earlier, Asian markets recorded solid gains, while most major European benchmark stock indices also closed in the green.