Sensex rebounds 578 points, but to stay volatile ahead

Markets cheered the Reserve Bank of India (RBI) move to keep rates unchanged and its outlook for lower inflation.

The ease in the face-off between the US and China over trade also aided the markets, which rebounded from a massive fall a day before.

Sensex rose 577.73 points, or 1.75%, to touch 33596.80, its highest close in this fiscal.

In its highest one-day gain in two years, Nifty rose 196.75 points, or 1.94%, to end the session at 10325.15.

Metals and banks contributed most as it rose more than 4%, helping the indices gain.

"It is mainly because of the global events, indices gained. The US market ended firm and the Asia market resuming positive helped the markets. The market will continue with volatility, there is no one way going up," G Chokkalingam, founder and managing director of Equinomics Research and Advisory, said. "This year the market will face a couple of shocks. Oil price going up, trade wars will continue to create volatility in the Indian market," he said.

"RBI's kept the expectation. One more quarter there will be no change in the parameter from RBI. Until September there is no possibility of a rate cut from the central bank," Chokkalingam added.

The rate-sensitive stocks like auto, banking and realty ended in the positive territory on the rate status quo.

In the banking pack, Kotak Mahindra Bank settled for the day with gains of 3.38%, while Yes Bank ended higher by 2.36%, State Bank of India 4.66%, Federal Bank 2.35%, Punjab National Bank 3.02% and Bank of Baroda 5.72%.

In the realty segment, Godrej Properties ended the day up 1.46%, Prestige Estates Projects 3.03%, Oberoi Realty 0.38%.

In the auto pack, Mahindra & Mahindra settled up 1.88%, Tata Motors 2.22% and Bajaj Auto 1.22%.

The broader market too ended in the green with the Midcap and Smallcap indices rising 1.88% and 1.87%, respectively at the end of the day.

All the 19 BSE sectoral indices ended positive on Thursday with Metal index (4.14%) surging the most, followed by Basic Materials (3.18%), Bankex (2.78%), Realty (2.55%) and Finance (2.39%).

"Two reasons mainly led to the gains, with the global trend being one. The entire Asian market was positive and the bond rate slipping was another factor. Fall in bond yields helped the bank stocks surge almost 2%. The PSU Banks also rose steeply. Commentary by the RBI governor Urjit Patel was also very satisfying, which boosted the investor sentiment," Rahul Shah, vice-president, equity advisory group, at Motilal Oswal Securities, said.

Meanwhile, the foreign portfolio investors (FPI) sold shares worth Rs 108.02 crore while domestic institutional investors (DII) purchased shares worth Rs 615.28 crore on a net basis on Thursday.

On earnings, Chokkalingam said, "Earnings season will be better this quarter as GST and demonetisation effects are over."

Out of 50 stocks on Nifty, 48 advanced and only two declined. Hindalco (6.52%), Vedanta (5.56%), State Bank of India (5.46%), Bajaj Finserv Services (5.19%) and Indiabulls Housing Finance (4.50%) were the top gainers on the Nifty. Only Cipla (1.72%) and Bharti Airtel (0.27%) were the losers. .

On BSE, State Bank of India, Tata Motors, Tata Steel, ICICI Bank and Kotak Bank were the biggest laggards jumping as much as 4.66%. Bharti Airtel was the only losing stock, falling 0.14%.

"Volatility will take a front seat once the companies start announcing their fourth-quarter earnings reports next week," Shah said.

Globally, in the Asian region, Japan's Nikkei ended 1.53% higher, while Singapore gained 1.97%. Hong Kong and Shanghai markets were shut on Thursday for a public holiday. In the Eurozone, Frankfurt's DAX gained 1.80% and London's FTSE too was up 1.29%.