“The bears have thrown in the towel,” said Sunil Sharma, chief investment officer, Sanctum Wealth Management, adding, “There has been a paradigm shift by the Fed. Quantitative easing is probably on its way back as are rate cuts.”
In January, the Fed had surprised the Street by hitting the pause button on interest rate hike. Since then, most risky assets globally have seen a sharp uptick, even as the US bond yields have cooled off. Before the Fed’s meeting on January 31, the yield on the 10-year US Treasury was more than 2.75 per cent. Currently, it is hovering around 2.6 per cent.
Market players say the softening of the US yields have triggered fresh ‘carry trades’, a strategy whereby an investor borrows money at low interest rates and invests in an asset class that will provide a higher return. Tuesday’s gains were led by index heavyweights ITC, Reliance Industries (RIL), and Infosys. Shares of RIL climbed 2.1 per cent to a new high of Rs 1,375, valuing the company at more than $125 billion.
ITC, NTPC, and HCL Technologies were the other stocks that gained more than 2 per cent each. Among the losers was Hero MotoCorp, which fell 2.1 per cent - the most among Sensex components.
Shares of Larsen & Toubro fell 1.6 per cent after the company launched a hostile bid to take over mid-sized information technology firm Mindtree.