Sensex vaults 438 points on Yellen comments

Markets rebounded to end with strong gains amid a rally in global stocks after US Federal Reserve chair Janet Yellen indicated that the central bank would move cautiously in regards with interest rate hike. Also, prospects of an interest rate cut by the RBI at its forthcoming monetary policy review spurted buying across the board.

The S&P BSE Sensex closed at 25,339, up by 438 points while the Nifty ended at 7,735, up 138 points. The broader markets finished in line with the larger peers with BSE Midcap and Smallcap indices soaring over 1.5% each.

“We expect markets to remain volatile till the time financial stability returns in the global markets. From domestic economy stand-point, corporate earnings appear to be bottoming out but we may see a muted earnings season in the 4th quarter. We believe earnings are likely to pick-up from second half of 2016-17. Post the Centre’s reduction in rates of small saving schemes, there are expectations of rate cut in RBI’s April’16 monetary policy. In near term, markets are likely to be volatile till global dust settles down,” said Avnish Jain, Head - Fixed Income, Canara Robeco Mutual Fund.

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Asian stocks barring Japan’s Nikkei closed firm tracking the rise in US equities as investors welcomed the indication from the Federal Reserve Chair Janet Yellen’s comment that the central bank will move slowly to raise interest rates. Hong Kong’s Hang Seng and China’s Shanghai Composite soared between 2%-3%. On the other hand, Tokyo’s Nikkei bucked the trend and lost 1.3% as the Japanese fiscal year draws to a close at the end of this month, with the mood not helped by mixed economic data released before the market opened. Following the suit, European stocks gained across the board with FTSE 100, CAC 40 and DAX trading higher by 1.5% each.

SUGAR STOCKS IN SWEET SPOT

Shares of sugar manufacturers were trading higher by up to 20% on the bourses in intra-day trade on expectation of lower production for sugar season 2016-17.

Upper Ganges Sugar & Industries, Dhampur Sugar Mills, Balrampur Chini Mills and Bannari Amman Sugars, Simbhaoli Sugars, Oudh Sugar Mills, Uttam Sugar Mills, Dharani Sugars & Chemicals, Mawana Sugars, Dwarikesh Sugar Industries and Parrys Sugar Industries closed higher between 5%-20%.

BANKS RALLY

Banking shares mainly public sector undertakings (PSU) closed higher by up to 5% on the bourses. State Bank of India (SBI), Indian Overseas Bank, Punjab National Bank, Bank of India, Bank of Baroda, Canara Bank, Oriental Bank of Commerce and Union Bank of India rose between 2%-5%.

METALS SHINE

Metal stocks gained across the board after media reports stated that the government has extended safeguard tax on some steel imports. Hindustan Zinc, Vedanta, Hindalco, SAIL,  JSPL, NALCO,  Tata Steel and JSW Steel surged up to 7%.

SMART MOVERS

Shares of Tata Steel jumped over 6.5% after the board of directors at its meeting held on Tuesday to review the performance of the loss making European business decided to explore all options for portfolio restructuring including potential divestment of Tata Steel UK in whole or in parts.

Gail India soared 3.5% after the company started drilling the first exploratory well as operator in its NELP-IX block CB-ONN-2010/11 in Cambay Basin.

Sun Pharmaceutical Industries gained 2% after the company acquired 14 prescription brands from Novartis AG and Novartis Pharma AG in Japan for $293 million.

Meanwhile, its peer Lupin surged 5% recovering from Tuesday's losses when it said the U.S. Food and Drug Administration had issued observations for a facility in central India.

Tata Motors climbed 3.5% after it tied up with NDTV's auto venture Carandbike.Com for the online bookings of its upcoming hatchback Tiago.

On the flip side, HDFC, M&M, Maruti Suzuki and Bharti Airtel lost 0.5%-1.3%.