Dalal Street hails truce in West Asia, Sensex rises 3k points

MUMBAI: A tentative truce in the West Asian war overnight prompted global investors to hit the buy button on Wednesday, leading to sharp gains in global markets including India. Starting in Japan, moving on to Hong Kong, China, Pakistan, UK, Germany and later in the evening to the US, all markets were in high spirits and closed higher.The Sensex gained 2,946 points or 4 per cent to close at 77,563, near a one-month high, as crude oil prices fell below the psychologically important $100 a barrel mark and the rupee strengthened. The index rose nearly 3,000 points that day, the second-largest single-day gain in history. The day’s gains also added 1,630 crore rupees to investor wealth, the largest single-day gain in history, while India’s market capitalization now stands at 4,450 crore rupees, BSE data showed.Indexes across sectors ended higher, led by gains in real estate, automobiles and financial services. BSE data showed that the day’s sharp gains were due to strong buying by domestic funds with a net inflow of Rs 4,168 crore, while foreign funds continued to be sellers with a net outflow of Rs 2,812 crore.The ceasefire between Iran and the United States announced on Tuesday night still looks fragile, although India can now breathe a sigh of relief on several fronts. Nilesh Shah, MD, Kotak Mahindra Mutual Fund, said that from India’s perspective, the security of the 9 million Indians working in the Persian Gulf region, energy supplies from the possible opening of the Strait of Hormuz, energy prices close to pre-war levels and remittance flows from pre-war levels in West Asia are crucial.However, Shah warned that markets would continue to react to events and “there could be a lot of missteps between the cup and the lip,” indicating the fragility of the ceasefire. “Investors should follow the dharma of asset allocation. Don’t chase momentum that fluctuates due to events. Be a disciplined investor and catch the falling knife,” he said. The day’s gains came as a relief to D Street investors and traders, but the sharp decline in the volatility index reflected India’s VIX index closing down 20% at 19.7 points, NSE data showed.Of the 30 Sensory Index constituents, 27 closed higher, with InterGlobe Aviation (Indigo) rising 8.2% and L&T closing 7.6% higher.