The BSE Sensex rose by 1.1% on Tuesday to reach its highest close in five months. The Sensex advanced by 194.18 points to close the day at 17,885.26, a level last seen on March 14th. A multitude of positive developments contributed to the surge, including Infosys winning a lawsuit and falling inflation. Global cues also helped sentiments as shares benefited from expectations for the European Central Bank to lower Spanish and Italian borrowing costs. In addition, consumer good stocks gained on favourable rainfalls late in the monsoon season.
Foreign institutional investors were net buyers of 8.98 billion rupees in domestic stocks last week which marks a third consecutive week of purchases, showcasing investor confidence in India. The total foreign institutional investor inflow now stands at $10.41 billion.
Investor sentiment was also aided by expectations of rate cut announcements from state-run banks following the Finance Minister’s call to reduce rates. Furthermore retail inflation declined to 9.86% in July from 10.02% in June.
Information technology stocks were among the top gainers. The BSE IT index has moved up by nearly 2.5% now. IT heavyweights, Infosys (3.5%), Tata Consultancy Services (2%) and Wipro (1.3%) rallied upwards. The auto sector also rose by 1.19% on anticipation that rain will generate buying power for tractors and vehicles in rural areas. Tata Motors was among the biggest gainers with a 2.37% increase.