Sensex Surges 500 Points As China Fears Ease: 10 Developments

BSE Sensex and Nifty surged on Thursday, tracking gains in global markets. The Sensex rose nearly 550 points at its day’s high of 26,256 while Nifty was near 7,950. The rupee also traded higher. China stock markets registered their biggest gain today in two months, lifting the sentiment in domestic markets.

Here are the top 10 developments:

1) Global markets rebounded today after a top official of Federal Reserve yesterday said that a September rate hike from the US agency looks “less compelling” in the wake of global growth concerns.

2) A rate hike from the US could have triggered outflows from emerging markets, leading to more turmoil in global financial markets.

3) Also lifting the global market sentiment, Japan’s central bank governor Haruhiko Kuroda said market players had become “too pessimistic” about China, and he expected its growth would likely remain at 6-7 per cent this year and next.

4) Markets around the world plunged earlier in the week as a slump in Shanghai shares fueled worries over China’s economic health, but some calm returned after Beijing rolled out strong policy easing steps late on Tuesday.

5) The Fed official’s comment led to a big rally on the Wall Street overnight. The Dow Jones industrial average surged 3.95 per cent higher at 16,285.51. Its gain of 619.07 points was its biggest since 2008. Major European markets also gained nearly 2.5 per cent in early trade.

6) Markets in China also rebounded today, snapping a six-day fall. The blue-chip CSI300 index jumped 6 per cent, while the Shanghai Composite Index gained 5.4 per cent – their biggest one-day percentage gains in nearly two months. China markets had slumped over 20 per cent in the previous six sessions.

7) Following the comments from the Fed official, analysts say the possibility of a rate cut from the Reserve Bank of India (RBI) has brightened. The RBI’s next policy review meet is scheduled for September 29.

8) Analysts however say that unless selling pressure from foreign institutional investors abates, Indian markets are unlikely to gain a steady footing. Foreign institutional investors hold nearly 25 per cent of BSE 200 stocks.

9) Foreign investors sold Indian shares worth Rs 2345.77 crore on Wednesday. This takes their total selling to nearly Rs 13,500 crore in the previous five sessions. In contrast, domestic investors bought stocks worth Rs 1881.08 crore on Wednesday. They have been big buyers of Indian stocks in the past few days, offering some support to Sensex and Nifty.

10) Dalal Street however is likely to remain choppy in late trade as derivatives for the August series expire today. (With Agency Inputs)