The markets maintained their strong momentum during the closing hours and also helped the indices reach a new intraday high. Consequently, the Sensex closed with gains of around 330 points whereas gains in the Nifty stood at around 100 points (both up 1.7% each). BSE Mid cap and small cap indices also performed exceptionally well, registering gains in the region of around 3% each. On the Sensex, only one stock declined for every five that ended the day in the green. Pharma major Cipla emerged as the biggest winner, as it surged around 6%.
Almost all of Asia closed strongly today whereas Europe has also opened on a positive note. The rupee was trading at Rs 45.5 to the dollar at the time of writing.
Markets closed higher for the third straight day of the week. A sharp turnaround from the mood prevailing last week where a series of scams had sent shockwaves through the system. Clearly, investor memories are getting shorter by the day. Or is it a case of too much money chasing too few assets. We believe it is more of the latter than the former. In a world starved for growth, countries like India present the only bright spot and hence investors are willing to take things like scams and frauds in their stride. It should also be noted that the current rally is one where quality is really being paid attention to and stocks with bad management or bad business model is indeed being punished. Still, too much of premium is also a bad thing and investors should be on the guard for this.
Private banking stocks traded strong today with leading gainers being Yes Bank and Development Credit Bank. As per a leading daily, ICICI Bank, India's second largest lender has withdrawn its teaser home loan rates scheme with immediate effect. The scheme, which entailed cheaper home loans to new borrowers had really taken off in a big way in recent times with almost all the banks jumping into the fray. However, India's central bank, the RBI, took a great deal of objection to the scheme, arguing that it could lead to greater instances of default in the home loan space. In view of this, it had tightened the noose around such loans and had also asked banks to stop selling the same. ICICI Bank has shown the willingness to play ball. It remains to be seen whether other banks will follow suit or not.