Mumbai: Share prices as well as the rupee rose on Monday after the Reserve Bank of India (RBI) reduced rates last week and the government announced fiscal measures to lift the economy. Strong gains in the Asian markets also seemed to prop the mood as the key benchmark indices surged. Profit taking at the upper end of the market saw them shed the initial smart gains.
Eventually, the Sensex closed by gaining 2.2%, or 197.42 points, to end at 9,162.62. The S&P CNX Nifty of the National Stock Exchange also made a matching gain of 2.56% to end at 2,784 points. The MSCI Emerging Markets Index gained 6.2% to 527.43.
This seen as the biggest increase since the US and International Monetary Fund pledged to help developing nations overcome the credit crisis on October 30.
RBI's third rate cut on Saturday in less than two months saw companies in the rate-sensitive sectors, such as real estate giant DLF Ltd and mortgage lender HDFC rose jumped 8.9% and 5.7%, respectively. Positive cues from research agencies on the global steel scenario added to the cheer and Tata Steel shares gained 7.4%.
The rupee gained 0.8% hit a three-week high during the day. The currency appreciated 0.8% to 49.185 a dollar. Bond prices also gained with the yield on the benchmark 10-year bond touching a four-year low. RBI data showed the yield on the 8.24%, 10-year bond dropped 7 basis points to 6.69%.
The underlying tone seems to be positive as there was hectic action witnessed in the futures and options segment as the 8 lakh contracts were dealt and the Nifty Decembers price was at a hefty 7.9% premium, one of the highest in the recent times. Traders were also seen cutting short positions in the market place.
FIIs were net purchasers to the extent of Rs 51.20 crore on Monday and now have been net purchasers for the first week of December taking the net purchase number to Rs 266 crore.
