Equity markets put up a stupendous performance on the last trading day of the week, as investors, armed with a sharp drop in WPI inflation data and rising expectations of a rate cut by RBI sooner, resorted to massive short-covering which further propelled the Sensex to close above the 28,000-mark.
Also, a smart recovery in the rupee against the dollar after an early fall in the currency further put the key indices in the drivers seat, thereby triggering massive recovery in the broader stock markets as well. Continuing with its declining trend in early trade, the rupee had shed another 24 paise to hit a near two-year low of 65.34 against the dollar before reversing the trend thereafter. The rupee was quoted at 65.06 as against Thursday's close of 65.10 versus dollar.
Driven by a sharp recovery in banking, realty, automobile and healthcare shares, the 30-share benchmark S&P Sensex closed at 28,067.31, up 517.78 points, or 1.9 percent from previous close. However, over the past week, the index lost 169 points, or 0.6 percent lower after a near 800 points loss in the first four session of the current week put the markets on the backfoot.
The broader 50-share CNX Nifty also closed above the psychological 8,500-mark at 8,518.55, up 162.70 points, or around 2 percent higher.
Market breadth ended positive with 1,790 stocks advancing against 1,054 declines on BSE.
"The steep fall in WPI inflation data and hopes that RBI may cut the rates further triggered short-covering in the markets today. The rupee appreciating after eight days of weakness also was a factor that helped the markets rebound. However, we expect the markets may continue to remain sideways in the near-term. Any major fall in the markets will always be countered by a sharp recovery as India still remains a good bet on the economic front," said Deven Choksey, managing director at KR Choksey Securities.
Earlier in the day, the government data showed deflationary trends continued for the ninth month in a row in July with wholesale inflation plunging to a historic low of (-)4.05 percent on cheaper vegetable and fuel. The fall in inflation may prompt RBI to cut interest rate ahead of the 29 September policy meet, a PTI report said. The WPI number follows retail inflation (CPI) data, which had slipped to a record low of 3.78 percent in July. The overall wholesale price index-based (WPI) inflation was (-)2.40 percent in June, government data showed.
Riding on hopes that RBI may soon cut policy rates on softening inflation data, interest-rate sensitive shares notched up significant gains.
Shares of ICICI Bank rose 3.6 percent to Rs 302.30, SBI jumped 3.5 percent to Rs 268.45, HDFC moved up 3.4 percent to Rs 1,299.80, Bajaj Auto gained 2.8 percent to Rs 2,558.80, M&M added 2.7 percent to Rs 1,376.55, HeroMoto Corp rose 2.6 percent at Rs 2,714 and Maruti Suzuki was up 2.1 percent at Rs 4,585.
Several realty shares, too, rallied sharply with DLF surging 18.3 percent to Rs 134.90, HDIL soaring 11.5 percent to Rs 84.70, Oberoi Realty scaling up 5.7 percent to Rs 255.80 and Unitech ending 5.6 percent higher at Rs 7.4.
Among other Sensex gainers, shares of Vedanta flared up 3.7 percent to Rs 107.20, Reliance Industries advanced 3.4 percent to Rs 967.05, Hindalco gained 2.6 percent to Rs 93.30 and Sun Pharma was up 2.3 percent at Rs 898.90.
Updated Date: Aug 14, 2015 16:55:11 IST