The benchmark Sensex rebounded more than 843 points on Friday in a volatile session where retail inflation data and expectations of a rate cut by the US Federal Reserve led to a recovery after an early morning crash.
The BSE bellwether oscillated 2131 points during the day — after opening at 81289.96, the gauge nosedived to a low of 80082.82, a crash of more than 1207 points, pulled down by weak global cues and selling by foreign portfolio investors.
The recovery started with gains in telecom, IT, and FMCG stocks and the index surged to a high of 82213.92 and later settled at 82133.12 — a gain of 1.04 per cent.
On the NSE, the broader Nifty climbed 219.60 points, or 0.89 per cent, to end at 24768.30 after falling 367.9 points in intra-day trade.
Analysts said the November inflation data has boosted chances of a rate cut by the Reserve Bank of India (RBI) in February though food prices remain a concern, which may prevent retail inflation to come down to 4 per cent on a durable basis.
However, optimism of another rate cut by the Fed next week coupled with cheaper valuations after the recent bout of corrections led to buying interest on Friday.
“The domestic market smartly recovered from the day’s low and moved out of the consolidation path led by index heavyweights,” Vinod Nair, head of research, Geojit Financial Services, said.
“A gradual easing in food inflation and a price hike by FMCG companies, along with a recent correction in valuation, supported the sector to outperform. Additionally, the expectation of an increase in US spending is propelling the IT sector,” Nair said.
“The markets were up as the drop in headline inflation come as a relief, allowing the central bank to start cutting rates from February,” Ameya Ranadive, chartered market technician, CFTe, Sr Technical Analyst, StoxBox, said.
The rally in stocks led to a similar movement for the rupee which gained around 8 paise against the dollar.At the inter-bank forex markets, the local unit ended at 84.7875 compared with its previous close of 84.86.
The rupee was also supported by FPI inflows during the day.
Provisional data showed them buying stocks worth ₹2,335 crore on Friday.
RBI bomb threat
Police in Mumbai said onFriday that they were investigating a bomb threat to the RBI after it received an email in Russian warning of an explosive attack, reports Reuters.
The warning was sent to the official email address of newly appointed RBI governor Sanjay Malhotra, a senior Mumbai police officer said.
“We have registered a case, and the investigation is ongoing,” the officer said.
