India's equity markets recouped some of the recent losses, gaining more than 1 per cent on Thursday, driven by strong buying across sectors like telecom, automobiles, fast moving consumer goods and banks.
The Bombay Stock Exchange's Sensex jumped 352 points or 1.1 per cent to close at 32,949.21 and the wider NSE Nifty 50 ended 123 points or 1.2 per cent higher, the most in over six months. Over the previous eight trading sessions, the benchmark indices had slipped near 3.5 per cent.
“Markets had been correcting over the past few sessions, and there has been some bounce back today in that backdrop,” said Sageraj Bariya, vice-president at East India Securities.
Further, there was also some sigh of relief as the Reserve Bank of India's monetary policy was largely in-line with expectations and not as hawkish as some had expected, he added.
Thursday's gains were led by telecom stocks – Bharti Airtel jumping 6 per cent. Idea Cellular and Reliance Communications also gained 4.7 per cent and 3.5 per cent respectively, following their recent hammering.
Other major gainers included auto stocks – Maruti Suzuki accelerated more than 3 per cent and Bajaj Auto, Hero MotoCorp and Tata Motors also gained 1-3 per cent.
Top public sector banks like State Bank of India, Bank of Baroda and Punjab National Bank were also among the gainers, up around 1 per cent, as expectations have risen that the government will spell out the details of the bank recapitalisation plan soon.
On Wednesday, RBI Governor Urjit Patel had said that the central bank was working closely with the department of financial services to finalise how much funding state-owned banks would have to raise and the amount of recapitalisation bonds that would be placed on the banks' balance sheets as the government's equity contribution.
Patel has said that the recapitalisation bonds will be front-loaded for banks that have managed their balance sheets more prudently, while for other banks, the capital allocation will depend on their resolve and progress towards reform in a time-bound manner.
Analysts also point out that the rebound in economic growth too augurs well for Indian markets. However, post Thursday's gains, equity markets may trade in a range as there are several key developments that investors will be watching out for closely.
A major event that can have a impact on the markets this month will be the election results in Gujarat, which is a key test for Prime Minister Narendra Modi. Also, eyes will be on the US Federal Reserve, which is expected to raise interest rates this month and whether Germany calls for snap elections after it failed to stitch together a coalition government. Also, foreign institutional investors will not be too active towards the end of the month, due to the Christmas holiday season.
