Sensex Soars 500 Points On Rate Cut Hopes

(RTTNews) - Indian equities rallied on Friday and the rupee recovered from a 23-month low after official data showed the country's wholesale inflation plunged to a historic low in July, driven by weak food and fuel prices. Deflationary trends continued for the ninth month in a row, with the annual price index falling to as low as (-) 4.05 percent from (-) 2.4 percent the month before. Economists had expected the WPI inflation to fall to 2.76 percent.

With both CPI and WPI figures for July surprising on the downside and crude prices hovering near 6-1/2-year lows, there is now more pressure on the Reserve Bank of India to cut rates at its next policy meeting due in September.

Investor sentiment was also buoyed by talks of the government seeking to schedule a special session of Parliament for passing the GST Bill and the latest quarterly rejig by MSCI in its emerging market indexes. Both the Lok Sabha and the Rajya Sabha were adjourned sine die yesterday but haven't yet been prorogued.

Rising for the second straight session, the benchmark index BSE Sensex ended the day up 517.78 points or 1.88 percent at 28,067.31. The broader Nifty index rose 162.70 points or 1.95 percent to close at 8,518.55, marking its biggest single-day gain since January 2015.

Financials led the rally, with HDFC Bank, HDFC, SBI and ICICI Bank climbing 2-4 percent. Metal stocks also gained ground after recent steep losses. Vedanta rallied 3.7 percent and Hindalco advanced 2.6 percent.

Market heavyweight Reliance Industries added 3.4 percent and Sun Pharma rose 2.3 percent to extend gains for the fourth consecutive session while automakers Hero MotoCorp, Mahindra & Mahindra and Bajaj Auto climbed about 3 percent each.

Adani Port and Special Economic Zone soared 8.7 percent, extending Thursday's 4 percent rally, on news the stock will replace NMDC in NSE Nifty from September 28.

NBCC, Reliance Capital and jet Airways jumped 3-8 percent after posting strong quarterly earnings. Shree Renuka Sugars, ICRA and MMTC dropped 2-4 percent on weak quarterly results.

On the global front, the Asian markets turned in a mixed performance as lackluster cues from Wall Street and weak commodity prices tempered gains resulting from easing concerns over a full-blown currency war.

Fears about a rapid yuan devaluation subsided after the People's Bank of China today set the currency's daily reference point a tad higher from the previous day's midpoint. Surprisingly, the move comes a day after the central bank said there was no basis for continued currency depreciation.

European stocks edged higher after Greek lawmakers approved the country's third bailout agreement with international creditors in a Parliamentary vote that relied on opposition party support.