Sensex rises 568 points, Nifty 2.68 per cent

Mumbai: China and Japan, which sent the markets plunging to new lows last week, fuelled the surge in the stock markets on Monday. The Asian markets soared on opening after China fixed the yuan at a one month high indicating that there would not be further devaluation of the yuan.

Other triggers for this robust rally were a cocktail of short covering and finance minister Arun Jaitley’s statement, which opened an expectation towards the forthcoming Budget.

The Sensex rose 568 points the highest jump since January 2015 to close at 23,554.12 whilst the Nifty hit an intra-day high of 7,182.80 points, before closing up 2.61 per cent at 7,162.95. The rupee too strengthened against the dollar after closing at 68.48 last Thursday, it closed at Rs 68.06, testing the Rs 68 levels and is still bearish.

Investors were richer by over Rs 2.5 lakh crore on Monday after losing Rs 3 lakh on Thursday on the fears of China devaluing the yuan. “A further boost was given to the market by a culmination of factors like value buying and short covering” said Vinod Nair, head-fundamental research, Geojit BNP Paribas Financial Services Ltd.

The rally was triggered post Mr Jaitley’s statement, which opened an expectation towards the Budget. “Until then we had not seen the pre-budget rally since the overall expectation was low, without any important reforms or overhauling plan,” he added.

Mr Ambareesh Baliga, senior stock analyst, said seeing the nature of the bounce back after Friday’s mild rally, “it looks like the rally could sustain. The capitulation on Thursday was so strong that there was a correction following better data from China,” he said. He said the rally could sustain.

One of the leaders of the rally were the PSU stocks because it was felt that PSUs have written off most of their NPAs so the next quarter results could be better, he said.

“We believe this rally is a pull-back as the markets were in an oversold territory,” Mr Baliga explained.

However he added that “that this rally will be short-lived as most foreign funds continue face redemption pressure.”

The strong recovery was led by metals and banking stocks which were clearly under pressure since the past many weeks, said Siddhartha Khemka, head, research, Centrum Wealth.