Indian shares rose sharply on Tuesday, as bargain hunters stepped in following the previous session's steep sell-off on disappointment over RBI's monetary policy stance. Investors are now pinning hopes that the latest move by Fitch Ratings to cut its credit outlook for India to 'negative' from 'stable' will spur some serious government action on policymaking.
There is a need for strong policy action from the government as a rating downgrade will increase the cost of money for India, former governor of the RBI Bimal Jalan said in an interview to CNBC-TV18.
The Reserve Bank of India yesterday surprised markets by keeping both the repo rate and the cash reserve ratio steady, as it sought to send a strong signal that it is now time for the Manmohan Singh government to undo bottlenecks and go ahead with reforms.
Prime Minister Manmohan Singh told the G20 Summit in Los Cabos (Mexico) that his government is determined to take tough decisions to revive investor sentiment and promote an atmosphere conducive to enterprise and creativity.
Signs of a pick-up in India's annual monsoon rains and firm European cues despite concerns about Spain's fiscal and banking problems also helped improve investor sentiment to some extent.
The benchmark 30-share Sensex ended the session up 154 points or 0.92 percent at 16,860, with 23 of its components advancing, while the broader Nifty index rose by 40 points or 0.78 percent to 5,104.
Gail India, Reliance Industries, ITC, Bharti Airtel, ONGC, Cipla, Coal India, TCS, ICICI Bank, Sun Pharma and Wipro were among the prominent gainers, with gains 1-3 percent, while automakers Maruti Suzuki and Bajaj Auto edged down marginally, power producer Tata Power slid 1.1 percent, software services exporter Infosys lost 1.3 percent and copper producer Sterlite fell 1.6 percent.
Other Asian markets closed on a mixed note, as worries over Spain offset optimism over the Greek election results ahead of two key debt auctions by Spain. European stocks advanced for a third day and the euro rebounded after a Spanish bond auction passed off without much hiccups.
by RTT Staff Writer
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