The Indian market soared to a fresh record high on Wednesday as investors cheered multiple factors such as bank recapitalisation plan, a few other global and technical factors. State Bank of India was the top percentage gainer in the NSE Nifty, surging as much as 27% to its highest since January 2015. Larsen & Toubro was the third-largest gainer in the index as it rose as much as 6.3%.
The 30-share BSE Sensex saw a gap-up opening of 456.55 points, or 1.40 percent, at 33,063.89 and the 50-share NSE Nifty rose 104.80 points, or 1.03 percent, to 10,312.50. But investors have looked to book profits from that point, as indices have cooled off from the record highs.
Apart from helping the public sector lenders meet stricter capitalisation norms, the additional capital will also help increase credit supply to the economy. 21 state-run banks account for more than two-thirds of India's banking assets. But they also account for a bulk of the record Rs. 9.5 lakh crore of soured loans.
Welcoming the government's announcement, IMF's senior resident representative, Andreas Bauer, said: "We have a long view that more resources are needed for recapitalisation and from that sense, the plans put out is a positive step."
The government also announced infrastructure spending of Rs. 6.92 lakh crore in building 83,677 km of road over the next five years. Infrastructure companies L&T, GMR Infra, NCC and IRB Infra rose over 5 per cent.
Indian stocks markets have rallied over 25 per cent so far this year, boosted by optimism recovery in economic growth, strong domestic inflows into stock markets and a global rally.