Markets stage relief rally; banking, auto stocks lead

Mumbai: Markets staged a strong comeback Wednesday after the recent rout as investors started accumulating battered financials, auto and metal stocks amid the rupee recovering from record lows.

The BSE Sensex, after a gap up opening at 34,493.21, rallied to hit a high of 34,858.35 before concluding 461.42 points, or 1.35 per cent higher at 34,760.89.

The broader Nifty too reclaimed the key 10,400 mark. It touched a high of 10,482.35, before finally settling at 10,460.10, showing a significant gain of 159.05.10 points, or 1.54 per cent.

Key indices stayed in the positive terrain through the session as buying activity gathered momentum.

The Sensex had lost nearly 175 points on Tuesday as the rupee plunged to a record low amid unabated capital outflows by foreign funds.

Sentiment also got a lift after the SBI, coming to the rescue of cash-strapped NBFCs, decided on Tuesday to buy their assets to the tune of Rs 45,000 crore, a move that will provide liquidity support to non-banking financing companies facing headwinds after a series of loan defaults by IL&FS group firms.

RBI's decision to inject Rs 12,000 crore liquidity into the system through purchase of government bonds on October 11 to meet festive season demand for funds also boosted the sentiment here, market watchers said.

The rupee recovered by 34 paise to 74.05 (intra-day) against the dollar at the forex market on Wednesday.

Selling also halted at emerging markets after the dollar turned weak from seven-week highs and steady crude oil prices also positively impacted sentiment.

Meanwhile, Brent crude, the international benchmark, was hovering around USD 84.30 a barrel.

Domestic institutional investors (DIIs) were net buyers as they bought shares worth Rs 1,526 crore Tuesday while foreign portfolio investors (FPIs) offloaded equities amounting to Rs 1,242 crore, provisional data showed.

Benchmarks largely benefited from value buying in beaten-down stocks, led by Maruti Suzuki, Tata Steel, Yes Bank and SBI amid a better trend at other Asian markets, traders said.