Market jumps as US seals ‘fiscal cliff’ deal

Nifty touches 6,000 mark to two-year high, India VIX ends close to all-time low

Riding on the last minute 'fiscal cliff' deal by the US lawmakers coupled with improvement in India's manufacturing growth, Indian benchmark indices gained for second consecutive session on Wednesday to a new two-year peak.

The 50-share Nifty twice surpassed the psychological 6,000 mark — new two-year high — during Wednesday's session before closing the day at 5,993.25, up 42.4 points or 0.71%. Sensex also climbed 0.7% or 133.43 points to close at 19,714.24 — highest since January 2011. Incidentally, India VIX — a barometer of volatility — ended at 13.71, which is quite close to its all-time low of 13.04.

Foreign institutional investors (FIIs) continued with the buying spree in Indian equities. According to provisional data, FIIs net bought $203.7 million worth of shares on Wednesday. Last year, FIIs bought Indian equities worth $24.5 billion — the second highest in more than 14 years as Indian markets were the best performing market globally.

Overcoming Republican resistance, the US House of Representatives late on Tuesday night passed the fiscal cliff Bill, ending a dramatic New Year's Day showdown over income taxes and deep federal spending cuts.

Global markets witnessed a sharp rally too, with major European indices rising to a new 19-month high following the outcome of the US budget deal. European indices were trading up 2-3% at the time of going to the press. Most Asian indices ended up 1-3% Wednesday.

Back home, shares of consumer durables, capital goods, banks and automobile companies were among the biggest gainers. The BSE Consumer Durables index surged 1.7%, while BSE Capital Goods index advanced 1.4%.

Other indices like BSE Oil & Gas, CNX Bank Nifty, and BSE Auto index gained 1% each. The positive mood was seen in broader markets too as BSE Mid-cap and Small-cap indices gained 0.6% and 0.9%, respectively. On BSE, 1,797 stock advanced while 1,166 stocks declined.

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