Sensex rallies 404 points as investors see more reforms
21 Sep 2012
Equity benchmarks hit their highest levels in more than 14 months, as investors are now betting that the ruling UPA coalition will be able to push through more economic reforms, having seen off the truculent Mamata Bannerjee without much damage.
The 30-share Sensex climbed 403.58 points - the second 400-plus point single day gain in five sessions - to close at 18,752.83. The 50-share Nifty hit a high of 5,720 before settling at 5691.15, up 136.90 points or 2.46 per cent over the previous close.
Brokers however cautioned that the rally was being driven mainly by a potent mix of positive sentiment and liquidity. Most leading brokerages reacted to last week's economic reforms cautiously. Despite the hike in diesel price and the approval for foreign direct investment in sectors like retail and aviation, the economy's deeper problems are still a long way from being fixed.
However, many foreign institutional investors think there is money to be made in the short term.
According to Sebi data, FIIs have net bought Rs 6262 crore of shares in three trading sessions between September 14-18. This is nearly 70% of the Rs 9323 crore of net purchases for the month so far.
The sudden gush of liquidity also coincides with the US Federal Reserve last week extending its monetary easing program under Operation Twister.
