Thanks to the the Samajwadi Party lending support to the UPA and Chidambaram announcing lowering of tax on foreign borrowing by Indian companies, the Sensex had its biggest jump this year, closing at 18752.83, 403.58 points up (2.20 percent) . The Nifty also zoomed past 5500 and closed at 5691.15, 136.90 points higher (2.46 percent). Even the rupee rose to its highest level in over four months to trade at 53.60/63 to the dollar from its Thursday close of 54.385/395.
Market analyst, Ambareesh Baliga, believes this rally is being fuelled by the government’s tough stance on reforms. Though, markets were expecting it for many months, this is the first major trigger, he said. “I think it is again the local investors who have come back to buying at these levels because I am sure they won’t like to miss out on the rally going ahead. FIIs anyway are buyers for last couple of weeks and that buying also continues,” he told CNBC-TV18 in an interview.
The government’s decision to go ahead with the notification and allowing foreign investment in multi-brand retail, aviation and broadcasting sectors despite widespread political opposition boost sentiments on the Streets.
After biting the bullet on foreign direct investment (FDI) in retail and aviation, the Centre is also likely to hike the foreign direct investment in insurance to 49 percent from 26 percent.
Against the backdrop of widespread uproar over decision on FDI, Prime Minister Manmohan Singh will explain to the nation today the reason behind the step and the benefits it would entail.
Additionally, Wall Street Journal reported that Walmart is looking to open its first outlets in India within 12 to 18 months while it seeks permissions from states that have allowed FDI in retail.
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Pantaloon Retail was up 4.92 percent after the government stuck to its stand on FDI in multi-brand retail.
RCom was up 7.82 percent after media reports that the company will raise tariff by 20 percent.