Sensex climbs 266 points as trade gap narrows to 30-month low

The benchmark Sensex erased early losses and surged 266 points to close above the 20,000 mark for the first time in almost three weeks after the latest trade data indicated the government's efforts to rein in the current account deficit are working.
Realty sector shares rose sharply, followed by healthcare, bank and capital goods stocks as 12 of the 13 BSE industry groups advanced.
Heavyweights Infosys and Reliance Industries, along with HDFC Bank and Sun Pharma, helped to prop up the Sensex.
The 30-share S&P BSE Sensex initially dropped to a low of 19,826.96 after Reserve Bank of India Governor Raghuram Rajan said the monetary policy should aim at lowering inflation expectations.

Sentiment was also hit after the International Monetary Fund forecast India's economic growth rate would fall to 4.25 per cent in the year ending March 31, 2014.
The Sensex bounced back after the trade data was released and ended at 20,249.26, a rise of 265.65 points or 1.33 per cent. It was the highest close for the index since 20,263.71 on September 20.

The government said the trade deficit in September narrowed to a 30-month low as gold and silver imports plunged. While exports grew 11.15 per cent, imports declined 18.1 per cent last month.
"The trade deficit for September came to a more than two-year low at USD 6.7 billion. This can be beneficial for the Indian currency as well as controlling the current account deficit," said Rakesh Goyal, senior vice president at Bonanza Portfolio Ltd. "Financial and banking stocks recovered from lower levels and showed strength after this news. Positive economic data and optimism ahead of quarterly results have led to this rally."

The 50-share CNX Nifty on the National Stock Exchange shot up 79.05 points, or 1.33 per cent, to 6,007.45. The SX40 index on the MCX Stock Exchange gained 151.11 points to end at 12,055.73.