Sensex rallies 259 pts, ends worst Nov in five years on positive note

The markets ended their worst November since 2011 on a positive note on Wednesday with the BSE Sensex gaining 258.80 points or 0.98% to close at 26652.81.

Nifty rose 82.35 points or 0.01% closing the day at 8224.50. Asian and European stocks too rose as investors awaited the conclusion of a highly-anticipated Organization of the Petroleum Exporting Countries (OPEC) meeting later in the day.

Rupee which too saw the worst November in five years rose marginally against the US dollar. last week, the rupee had hit its record low at 68.86 per dollar.  After their recent underperformance, banking stocks witnessed recovery.

In the wake of demonetization launched by the government and fears of Fed rate hike, markets have dropped the most in a month since February with the S&P BSE Sensex slipping 5.1% dragged by consumer and auto stocks. Moreover, markets saw a pull out of a net $2.5 billion with foreign investors withdrawing money from stocks.  

As citizens rushed to submit and exchange their defunct currency notes, more than Rs 8 lakh crore have been deposited into banks between November 10 and November 27.

With industry experts betting that bonds will be bought with funds out of Rs 8 lakh crore which have been deposited so far in banks post the rollout of demonetization, the bond yields dropped to a seven-year low in the month.

Additionally, the RBI resorted to extraordinary measures - hiking cash reserve ratio (CRR) to 100%, as a guard against the current liquidity glut.