Sensex surges 280 points on Yellen, Rajan comments

Indian markets continued their uptrend in the afternoon trading session on Thursday.

At 1.35 p.m., the 30-share BSE index Sensex was up 280.07 points (1.39 per cent) at 20,474.47 and the 50-share NSE index Nifty was up 85.4 points (1.43 per cent) at 6,075.

Among BSE sectoral indices, banking, capital goods, auto and realty indices led the charge and were up 2.92 per cent, 2.83 per cent, 2.57 per cent and 1.99 per cent.

Tata Motors, ICICI Bank, Tata Steel, L&T and M&M were the top five Sensex gainers, while the only losers were Coal India, Cipla, Sun Pharma, TCS and Bajaj Auto.

Volatility was down with the India Vix trading at 19.42, down 5.03 per cent.

Domestic markets followed global cues which turned positive on the statement by Janet Yellen, Vice Chairwoman of the US Federal Reserve, that the Fed would do whatever it takes to reduce the threat of another financial crisis.

The market sentiment was also propped up with the RBI Governor soothing investors’ nerves over rupee depreciation and pegging the Current Account Deficit (CAD) at around $56 billion.

However, with the Whole Sale Price Index (WPI) inflation at 7 per cent in October compared with 6.46 per cent in September this year, expectations that interest rates might ease may have to be tempered.

Janet Yellen in her testimony to the US Senate’s committee on banking said: “We have made progress in promoting a strong and stable financial system, but here, too, important work lies ahead. I am committed to using the Fed's supervisory and regulatory role to reduce the threat of another financial crisis. I believe that capital and liquidity rules and strong supervision are important tools for addressing the problem of financial institutions that are regarded as "too big to fail'' Overall, the Federal Reserve has sharpened its focus on financial stability and is taking that goal into consideration when carrying out its responsibilities for monetary policy. I support these developments and pledge, if confirmed, to continue them.”

Asian stocks bounced from six-week lows on Thursday after Federal Reserve Chairman nominee Janet Yellen signalled that the stimulus will be maintained until the US economy improves.

Japan's Nikkei surged 309.25 points or 2.12 per cent to 14,876.40, Hong Kong's Hang Seng jumped 192.78 points or 0.86 per cent to 22,656.60 and Australia's S&P/ASX 200 climbed 36.25 points or 0.68 per cent to 5,355.43.