(RTTNews) - Tuesday, the Indian market made a sharp comeback in the last one hour of the trading, helped by an intra-day recovery in Asian stocks and on expectations that the US Federal Reserve will lower its target for benchmark overnight rates by at least a half-percentage point to 0.5%. Economists expect the Federal Reserve to use aggressively unconventional measures to restore growth in the US economy.
Strong buying emerged in the afternoon on expectations of another cut in fuel prices, a second fiscal stimulus package from the government and rate cuts by the RBI. Additionally, net buying by foreign funds in December so far and a stronger rupee this morning boosted investor sentiment.
Replying to supplementaries during the Question hour in Rajya Sabha, the Home Minister P Chidambaram said that the government would look at the issue of cutting petrol and diesel prices further. "We will watch (crude oil) prices (to see) if a further reduction is possible," he said.
Investors shrugged off worries over lower tax payment by top companies in the December quarter. A preliminary data on advance tax payments reflected strong signs of a slowdown in the economy. Barring most government-owned banks, private sector lenders and some of India's largest companies have reported dips in advance tax payments for the quarter ended December.
After trading choppily for most part of the day, the BSE Sensex made a sharp comeback in the afternoon. The index rose to an intra-day high of 10,009 towards closing of the trading before finishing at 9,977, up 145 points or 1.47% over the previous close. Meanwhile, the S&P CNX Nifty ended at 3,042, up 2.03%.
On the other hand, the broad-based BSE 500 index gained 1.91%, the mid-cap index rose 2.50% and the small-cap index added 3.21%.
Stocks across the sectors ended in positive territory. Consumer durable, public sector and oil/gas stocks led the rally. Second- line stocks outperformed the benchmarks for a third day in a row. On the BSE, the market breadth was extremely positive, with 1866 advances compared to 648 stocks that declined. The Sensex futures ended at a premium of 138 points to the benchmark.
