The BSE benchmark index Sensex soared over 500 points to touch the 20,000 level in morning trade on Thursday following sustained buying by funds and retail investors, triggered by strengthening rupee and a firming trend overseas after the US Federal Reserve decided to keep its stimulus programme intact.
At 10.01 am, Sensex was up 545.58 points at 20507.74. Similarly, Nifty was up 176.50 points at 6075.95 during the same time.
The 30-share index, which had gained nearly 230 points in the past three sessions, rose further by 574.13 points, or 2.88 per cent, to 20,536.29 points with banking, realty, capital goods and auto sector stocks leading the rally.
The broad-based NSE Nifty also moved up 183.65 points, or 3.11 per cent, to 6,083.10.
Brokers said market sentiment turned extremely bullish on a flurry of buying by funds driven by strengthening rupee and a firming global trend after the US Federal Reserve surprised markets by sticking to its massive bond-buying programme.
The BSE banking index gained the most by surging 6.89 per cent to 12,711.50 as stocks like SBI was up 5.32 per cent, followed by ICICI Bank (8.18 per cent), Axis Bank (7.13 per cent), Yes Bank (16.27 per cent) and HDFC Bank (5.12 per cent).
In other Asian markets, Hong Kong's Hang Seng rose by 1.67 per cent, while Japan's Nikkei by 1.32 per cent in early trade on Thursday.
The US Dow Jones Industrial Average gained 0.95 per cent to hit record high in Wednesday's trade.
Business Today's Mahesh Nayak in his analysis of US Fed move and its impact on Indian financial markets wrote: For India, the news of zero taper is positive and this may also have a positive reaction with the financial market rising on Thursday.
However, overall it doesn't make much difference to India. In the last four years and nine months since QE started in the US on 25 November 2008 till date, the Fed has pumped slightly over $3 trillion to boost its battered economy. In the same period, close to $105 billion foreign institutional investors (FIIs) inflows came into the Indian equity and debt market. Even if one assumes that the entire FII inflows into India came from US, it this will not be over 3.5 per cent of the overall infusion of money by the Fed.
Meanwhile, zero tapering by the Fed will be soothing some nerves at Reserve Bank of India (RBI). On Friday, new RBI governor Raghuram Rajan will come out with his maiden policy and any tapering would have put pressure to further tighten interest rates to protect the rupee. However with the tapering being postponed, RBI can take its chance to cut rates for boosting growth. It will be interesting to see if Rajan bites the bullet.
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