5 Reasons Why The Sensex Has Surged 1200 Points In 2-Days

Business

oi-Sunil

By Sunil Fernandes

Published: Wednesday, March 2, 2016, 10:23 [IST]

The Sensex has gained 1200 points in 2-trading sessions. In fact, the near 800 points gain in the Sensex on Tuesday was the biggest single day gain we have seen in the last 7 years.

Here are 5 reasons why the Sensex has gained a huge 1200 points in 2-trading sessions.

1) No change in long term capital gains tax

It was widely believed that the Union Budget 2016 would increase the time frame for the long term capital gains for equity shares from 1 year to 3 years. To the relief of the market, that did not happen, which has led to a sharp surge in equities in the last 2 days.

2) Fiscal deficit

The Finance Minister's decision to keep the fiscal deficit at 3.5 per for FY 2016-17, was a huge relief for the markets. It was believed that the Finance Minister would hike the fiscal deficit in order to propel growth.

3) Hope of interest rate cuts

There are hopes that there would be an interest rate cut by the Reserve Bank of India in its forthcoming policy meet. This has pushed banking stocks higher led by State Bank of India and ICICI Bank.

4) Robust Global Cues

Global cues continue to remain robust with most Asian and European markets seeing a risk-on rally. The US markets surged 2 per cent on Tuesday.

5) Markets grossly oversold

Markets have been in oversold territory with the index shedding as much as 3000 points in Feb alone. This had led to a technical bounce and a short covering rally.

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