NEW DELHI: Strong buying across the board pushed equity barometer Sensex over 600 points higher in Wednesday’s session.
The market rallied for the second consecutive session after the major unknown of state elections got over and the government named Shaktikanta Das as the new governor of RBI to quickly fill in the vacuum created by the sudden resignation of Urjit Patel.
Around 03:13 pm, the BSE Sensex was up 600.30 points, or 1.71 per cent, at 35,750.31, while Nifty50 traded 180.60 points, or 1.71 per cent, higher at 10,729.75.
Going by the buzz on Dalal Street, here is what is fuelling the rally:
New RBI Governor
The swift appointment of the former economic affairs secretary Shaktikanta Das as RBI governor infused positive sentiment in the market. Banking stocks rose in hope that the new governor will relax the prompt corrective action framework and other stiff rules that had stymied their growth. India Inc has welcomed the appointment of a seasoned bureaucrat as new RBI governor. Industry leaders said his experience in handling economic affairs will play a critical role in dealing with various issues at the central bank.
Thaw in US-China relationship
Positive news about fresh talks for a US-China trade deal also infused optimism in markets. In an interview with Reuters, US President Donald Trump said talks were taking place with Beijing by phone and he would not raise tariffs on Chinese imports until he was sure about a deal. Reuters also reported that Trump promised to intervene in the Justice Department’s case against a top executive at China’s Huawei Technologies, if it would serve national security interests or help close a trade deal.
Brokerages still confident about Modi’s return
Even though BJP lost assembly elections in Rajasthan, Madhya Pradesh and Chhattisgarh to the Congress, the market is still confident about Modi’s chances of making a comeback in 2019. Analysts say while BJP may have lost seats in these elections, thanks mainly to anti-incumbency, there has not been any significant erosion in vote share for the party, which holds promise for the 2019 general elections. The issues in state election are different from those in the Lok Sabha polls and the saffron party might bounce back in about four months from now, they say.
State election manifestos show competitive populism, which could aid consumption but impact capex recovery,” CLSA said.
Macro data in sight
The October industrial production, manufacturing output and November Consumer Price Index (CPI) print will be out later today. A Reuters poll suggested country’s inflation might have cooled to a 16-month low in November, as food and fuel prices fell. The poll of 40 economists predicted retail inflation sank in November to 2.80 per cent from October’s 3.31 per cent. Forecasts in the poll, taken between December 4-7, ranged between 2.26 per cent and 4.00 per cent, Reuters said.