Sensex recovers 139 points on hopes Fed will retain low interest rates; Infosys gains 2.46%

After two days of sharp losses, the benchmark Sensex today rebounded from three-week lows and closed with a gain of 139 points in line with positive global markets on hopes Fed will retain its low interest rate regime and China will pump fresh funds in banks to boost lending.

The 30-issue BSE Sensex today resumed strong in line with rally in Asian stocks and moved in positive terrain throughout the day before concluding at 26,631.29 -- a rise of 138.78 points or 0.52%. In last straight two days, it had plummeted 568.53 points or 2.10%. Yesterday, it had registered its worst single-day drop of 324 points in nearly 7 weeks on across-the-board selling. The broader 50-issue CNX Nifty of the NSE also recovered today as it rose 42.60 points, or 0.54%, to 7,975.50.

"Speculation that Fed would maintain its interest rates low and boost growth for now and that China's central bank will provide the country's big banks with fresh loans – keep markets and commodities markets globally upbeat," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio. The United States Fed's two-day policy meeting ends later tonight. Buying was seen in selective blue-chips but was all-round as 10 out of 12 BSE sectoral indices closed in the green.

Second-line shares, which suffered the most yesterday, recouped some ground but underperformed the Sensex. Meanwhile, Foreign Portfolio Investors (FPIs) sold shares worth a net Rs 828.95 crore yesterday while DIIs bought shares worth Rs 465.61 crore, as per the provisional data from stock exchanges. Globally, Asian markets mostly rose Wednesday, with Shanghai leading gains. Report said the People's Bank of China would inject 500 billion yuan into the five top state-owned banks, with a view to boosting lending to businesses. 

 Asian stocks, excepting Japan, finished higher between 0.49% and 1.00%. European markets too were quoting better ahead of the US Fed's decision on interest rates late today. The CAC (France) was up 0.64%, DAX (Germany) by 0.49% and FTSE (UK) by 0.27%. US stocks ended strong yesterday with the Dow Jones Industrial Average hitting a record intra-day high ahead of Fed meeting outcome.

Jignesh Chaudhary, Head of Research, Veracity Broking Services said: "Indian equities traded strong for the day with the help of bluechips as global equities traded strong ahead of the Fed meet. US economic data continues to support the positive global cues as optimistic and upbeat economic reports has improved investor confidence. Investors are eagerly waiting for possible clues about interest rates from the meeting of the world's top central bank."

Twenty scrips out of the 30-share Sensex pack ended higher while others finished lower. Major gainers were Dr Reddy's Lab (2.52%), Infosys (2.29%), Tata Power (2.21%), BHEL (2.18%), Tata Steel (1.78%), Hero Motocorp (1.74%), Tata Motors (1.45%), Wipro (1.41%) and NTPC (0.91%). However, Cipla fell by 1.60%, Coal India 1.26%, Sun Pharma 0.70% and HDFC Bank 0.44%.

Among the S&P BSE sectoral indices, IT rose by 1.52%, followed by Power 1.35%, Teck 1.26%, Auto 1.02% and Capital Goods 0.81%. Total market breadth turned positive as 1,519 stocks closed in the green, 1,498 finished in the red while 101 ruled steady.