By RTT News, September 19, 2013, 07:24:00 AM EDT
(RTTNews.com) - Indian shares joined a global rally on Thursday after the U.S. Federal Reserve emphasized that there is "no fixed calendar" for the tapering and any future decision will be heavily dependent on incoming economic data. The decision surprised analysts and economists alike, who had expected a modest reduction in bond purchases.
The BSE Sensex rallied over 700 points to hit its highest level in 34 months before paring some earlier gains to end up 684 points or 3.43 percent at 20,647. The broader Nifty index hit a 16-week high before ending up 216 points or 3.66 percent at 6,116.
Rate-sensitive banking and realty stocks soared ahead of the Reserve Bank of India's monetary policy review due tomorrow, with many economists expecting the central bank to hold rates steady and unwind some of its liquidity tightening measures announced in July. However, with inflation concerns persisting, it may be difficult for new Governor Raghuram Rajan to completely reverse the tightening stance.
"It is business as usual for us as far as economic reforms are concerned. We shouldn't overly put emphasis on the decisions of the Fed in the manner in which the economy will unfold," Economic Affairs Secretary Arvind Mayaram reportedly told reporters in New Delhi.
SBI led the gainers in the Sensex pack with an 8 percent rally after the state-run lender raised its base rate by 10 basis points. Mahindra & Mahindra, Hindalco, ITC, Tata Motors. HDFC, HDFC Bank, Hindustan Unilever, Maruti Suzuki, Larsen & Toubro, ICICI Bank and Tata Steel jumped 3-7 percent.
Market heavyweight Reliance Industries gained 1.9 percent following a meeting with petroleum ministry officials to resolve long drawn issues in the KG-D6 block. Bharti Airtel and Bharti Infratel rose 3-5 percent on the back of block deals on the BSE.
Suzlon Energy rallied 3 percent after the wind turbine maker signed a pact to divest 75 percent stake in its Chinese a manufacturing unit to Poly LongMa Energy (Dalian) for $28 million.
Oil marketing companies BPCL, HPCL and IOC gained 2-7 percent and explorer ONGC rallied 5.9 percent on expectations the recent strength in rupee would reduce their combined under-recoveries.
Hind Rectifiers rose 2 percent on winning new orders. Jet Airways added half a percent as Etihad awaits regulatory approval to pick up a 24 percent stake in the airline.
On the global front, the other Asian markets rallied and European stocks rose to their highest level in more than five years on improved risk appetite after the Fed kept its stimulus unchanged at the end of its two-day policy meeting. The Fed maintained its $85 billion monthly bond-buying program, citing ongoing U.S. growth uncertainty and mounting fiscal concerns from U.S. debt ceiling negotiations.
Chairman Ben Bernanke said in his press conference that the central bank will maintain a highly accommodative policy to maintain downward pressure on longer-term interest rates and support mortgage markets, boosting risk sentiment and easing concerns that fund flows may reverse from the emerging markets back to the U.S.
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