Sensex bounces back on PM's assurance; closes 154 pts higher

Helped by oil & gas, FMCG and banking stocks, the BSE benchmark index rebounded to close higher by 153.97 points or 0.92 per cent at 16,859.80. It had plunged 244 points yesterday as the RBI kept interest rates unchanged.

"Like other countries, we too allowed the fiscal deficit to expand after 2008 to impart a stimulus. We are now focussing on reversing the expansion. This will require tough decisions, including on controlling subsidies, which we are determined to take," Singh said while addressing leaders of the G-20 nations in Mexico.

Oil & gas counters, led by Reliance Industries, spurted as crude dropped below USD 83 a barrel in Asia. ITC rose to lead the rise in the FMCG sector, which is perceived as a defensive bet in a volatile market.

Bank stocks like ICICI Bank, HDFC Bank and SBI also rose around 1 per cent each after taking a beating yesterday.

The 50-share National Stock Exchange index Nifty shot up by 39.60 points, or 0.78 per cent to 5,103.85 with stocks of refinery, FMCG and healthcare staging a smart recovery.

The market mood was also supported as Finance Minister Pranab Mukherjee in New Delhi said the government is taking steps to improve inflow of foreign investment.

A firming trend in European stocks as Greece moved towards forming a new government and a Spanish debt sale meeting targets fuelled the domestic rally with 23 stocks out of the 30-share Sensex closing higher.

Dealers said investors ignored the rupee falling below the 56-mark yet again as global investors await signals in two-day US FOMC meeting, starting today, for a stimulus package.(MORE)