NEW DELHI: The domestic equity market staged a smart recovery on Wednesday, as BSE benchmark Sensex posted its biggest single-session gain in over six months after rising 461 points.
The surge in domestic stocks was technical in nature where a mix of both technical indicators, which were in oversold territory, and short coverings, resulted in a relief rally for the market. The rally, however, may not last long, analysts said.
Besides short covering, a host of other factors — recovery in the rupee against US dollar, fall in crude oil prices and hopes of foreign fund inflows — also boosted the market.
Buying in bank stocks was another positive that worked in the favour of the bulls.
Sensex jumped 461.42 points or 1.35 per cent to 34,760.89, logging its biggest gain since April 5, 2018.
Meanwhile, volatility index, India Vix plunged 8.83 per cent to 18.01.
"Market turned positive from oversold region led by financial stocks and marginal gain in the rupee. Besides, RBIs open market operation to buy government bonds will ease concerns about liquidity crunch in the system. Benchmark indices and midcap are currently trading at a five-year average 1-year forward PE of 16 times and 17.6 times, respectively, which provides accumulating opportunity once the yield and currency stabilise," said Vinod Nair, Head of Research, Geojit Financial Services.
The domestic currency appreciated nearly 33 paise against the US dollar in intraday trade today, buoyed by RBIs announcement to conduct OMO of Rs 12,000 crore to manage liquidity in the financial system.
Oil prices slipped after the IMF lowered its global growth forecasts, but markets were supported as Hurricane Michael moved towards Florida causing the shutdown of nearly 40 per cent of US Gulf of Mexico crude production.
Infosys, TCS, Sun Pharma, Wipro and Coal India were the losers in Sensex kitty of stocks.
The gains in Sensex were mainly on account of a rise in banking stocks.
The NSE Nifty reclaimed the 10,450 level to close at 10,460.10, up 159.05 points, 1.54 per cent. In the 50-share index, 42 stocks ended in the green and eight in the red.
All sectors on BSE barring IT and teck closed the day on a positive note. BSE IT index settled 1.52 per cent lower.
Among sectors that surged the most were – realty, consumer durables, bankex, finance and industrials, and logged gains of up to 4 per cent.
On BSE, the midcap and smallcap stocks outperformed benchmark Sensex.
The Nifty Midcap100 index logged its biggest 1-day gain ever and closed the day 663 points higher.