Moody's upgrade & higher Asian stocks boost Sensex

The upgradation of India’s rating to investment grade by rating agency Moody’s, followed by positive global cues after China’s trade data and reports of in-principle approval by state governments to GST (goods and service tax) proposal all combined triggered a market rally, on Tuesday, led by index heavyweight Reliance Industries and financial shares.

The state governments’ nod to GST has raised hopes that the ambitious tax reform could be included in the upcoming budget which also boosted investor sentiment on D-Street on Tuesday.

Moody’s has upgraded the short-term ceiling on foreign currency bank deposits will help the country’s corporates to borrow abroad at a slightly better rate, aver analysts. They also point out that Sebi’s move to reduce timeline in buyback through tender offer was another reason that bumped up the market.

The day’s rally on the bourses was broad-based as all the 13 sectoral indices on BSE were in the green. Capital goods stocks rose on bargain hunting after last month’s steep slide. Index heavyweight Reliance Industries (RIL) rose nearly 4 per cent, while interest rate sensitive auto, realty and banking stocks surged on expectations that RBI will start cutting interest rates in the coming months to prop up slowing economy.

The Sensex at BSE jumped 350 points or 2.22 per cent to settle at 16,165. The S&P CNX Nifty at NSE jumped 107 points or 2.25 per cent to settle at 4,849. From broader markets, the BSE Mid-Cap index rose 2.24 per cent and the BSE Small-Cap index gained 2.63 per cent. Both these indices outperformed the Sensex. 

The market breadth was quite strong with as many as 2,152 shares on BSE rose and 681 shares fell,while a total of 95 shares remained static. The BSE clocked turnover of Rs 2,545 crore, higher than Rs 1,986.31 crore on Monday.

Meanwhile, during the day, European stocks rose after aluminium major Alcoa began the US earnings season with in line results on Monday and a bullish view of the global aluminum market. Key benchmark indices in France, Germany and UK rose by between 0.99 to 2.4 per cent. Asian stocks rose this day on optimism the US economy is weathering Europe's sovereign-debt crisis.