associate sponsors


Sensex above 28,000: How GST, monsoon, Bank of England's QE plans moved markets

Domestic equity markets showed strong resilience today after languishing in red in last four out of five sessions, bolstered by factors including passage of GST Bill in Rajya Sabha, revival of monsoon and favourable global cues.

In fact, the benchmark Sensex outperformed most of its Asian peers today with the index breaching the psychological 28,000-mark aided by strong all-round buying support.



On the Dalal Street, the 30-share BSE S&P Sensex closed the session at 28,078.35, up 363.98 points, or 1.31 percent higher over previous close.

The broader 50-stock Nifty ended the session at 8,683.15, up 132.05 points, or 1.54 percent higher.

Before today's sharp revival in sentiment, markets were under the grip of a strong bear hug with Sensex plunging 511 points or 1.82 percent lower in last four of five sessions.

"Market is hoping that discussions on GST Bill in next few months will yield positive results, and government maintaining stance that it would try to rollout by start of next fiscal has enthused investors. Also, Bank of England in its meeting yesterday decided to boost quantitative easing, which would result in abundant liquidity making its way into emerging markets, including India. Even the strong monsoon across the country has fuelled hopes that India could be headed for a robust growth this year, leading to a likely revival in several consumer-centric sectors going ahead," said AK Prabhakar, Head of Research, IDBI Capital Market.

While stock market participants were excited about the bright prospects of the GST Bill getting passed in this monsoon session of parliament, the same in fact failed to translate into a rally once the bill actually passed the parliament muster.

Stock traders opine that the passage of the bill was already priced in the market, as the markets had already run up sharply in last few weeks.

So, then what led to the sharp upsurge in today's trades. Market experts said several factors, both external and domestic, contributed to the rally.

Bank of England rate cut boosts sentiment: For first time in seven years, the Bank of England cut interest rates to a new record low of 0.25 percent from 0.5 percent and signalled further cuts in coming months, a move designed to prevent a post-Brexit recession. UK's central bank also extended the existing quantitative easing (QE) programme by planning to pump in additional 60 billion pound to to 435 billion pound in total, triggering a wave of sharp rally in other Asian and European markets.

Positive Asian cues: Besides Indian markets, other Asian indices such as China's Hang Seng shot up 1.44 percent, Jakarta Composite gained 0.9 percent and KLSE Composite was up 0.5 percent at close. Key European gauges such as CAC, DAX and FTSE were up around a percent each in early trades.

GST rollout factor: While the market has been enthused by the passage of the GST Bill in the parliament this week, the rally got a shot in the arm after the government stated that it would make all possible effort to roll out GST as per the schedule time period of 1 April, 2017.

Monsoon cheer: With the monsoon coverage across the country being more than satisfactory so far, investors are hoping this would reflect in strong economic growth and help cool down inflation going ahead. Besides this, a strong monsoon could fuel strong rural demand and boost consumption.

FII buying stays robust: Even as the market remained subdued in last few sessions, foreign investors remained upbeat about India's growth prospects thus infusing Rs 2,019 crore in previous four sessions. In fact, FIIs have pumped in a robust Rs 32,974 crore in local equity this year so far, while benchmark Sensex shot up by a whopping 22 percent or 5,151 points from a 9-month low of 22,951 touched in early February this year amid weak global cues and lingering banks' non-performing loan woes.

Updated Date: Aug 05, 2016 17:11 PM

Also Watch

Watch: The true stories from Dharavi that inspired Rajinikanth's Kaala
  • Thursday, March 8, 2018 Watch: Cyrus Khan talks about Parkour, jumping across walls and why he hates sitting
  • Thursday, May 31, 2018 Unwind: India's basketball sensation Amjyot Singh has his eyes set on becoming an NBA regular
  • Monday, May 28, 2018 First Day First Showsha — Review of Solo: A Star Wars Story in 10 questions
  • Saturday, May 19, 2018 Social Media Star: Rajkummar Rao and Bhuvan Bam open up about selfie culture, online trolls

Also See

{if $hideJSforEU != 'yes'} {/if}