Sensex up 500 points, Nifty crosses 17,000 mark

A six day losing streak, the BSE Sensex went up 500 points while the NSE Nifty 50 surpassed the 17,000 mark in Thursday's trade ahead of the end of September series futures and options contracts.

After the Bank of England BOE said it would buy long-dated British bonds in a move that would restore financial stability in the country, the indices rebounded, tracking strong gains on Wall Street overnight.

A recovery in the rupee against the US dollar was added to the sentiment. Domestic stocks rose in early trade because of the monthly F&O expiry and technical factors, which led to a drop in oil prices.

When negative sentiments become dominant, the risk-off gains momentum and markets get oversold. An unexpected trigger usually reverses the near-term outlook, leading to short coverings. This was exactly what happened in global markets when the Bank of England surprised markets with Quantitative Easing, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Vijayakumar of Geojit Financial Services noted that BoE decision was a reflection of the economic woes of the UK. The market interpretation of the BoE's surprise decision is that the Fed might pause its rate hike to avert a sharp economic downturn. He said that the relief rally is likely to run out of steam and investors need not make aggressive buys now.

Edward Moya, Senior Market Analyst at The Americas OANDA, said US stocks rallied after the BOE s intervention tentatively halted the bond market selloff.

The 30 pack Dow Jones Industrial Average went up 548.75 points or 1.88 per cent overnight to close at 29,683. The S&P 500 index increased by 1.97 per cent to 3,719. Nasdaq Composite added 2.05 per cent to 11,051. Asian markets added up to 1.8 per cent in early trade. Hong Kong's Hang Seng gained 0.8 per cent, Japan's Nikkei gained 0.5 per cent, while China's Shanghai Composite rose 0.27 per cent by 9.19 am IST. Domestic stocks were no exceptions.

The Bank of England announced on Tuesday that it will carry out temporary purchases of long-dated UK government bonds in order to restore orderly market conditions that offer investors some support, which is a positive catalyst, said Prashanth Tapse, Senior VP for Research at Mehta Equities.

Rupee recovers, oil falls.

The rupee was trading at 81.59 level against the dollar in early trade after a record closing low of 81.94 high on Thursday. Foreign flows or vice versa are hurt by a fall in the rupee. Provisional data showed FPIs were net sellers to the tune of Rs 2,772. On Wednesday, there were 49 crore.

The price of crude oil fell by 59 cents, or 0.7 per cent, to $88.73 per barrel earlier today. The U.S. crude futures fell 54 cents, or 0.7 per cent, to $81.59. Both benchmarks rebounded in the past two sessions amid volatile trade, after reaching nine-month lows this week, according to Reuters.

The market was extremely oversold on technical charts.

Sameet Chavan of Angel One said that the formation of the Inverted Hammer candle on the technical chart could be seen as a ray of hope for a reversal of the ongoing selling saga.

The gap between 16,750 -- 16,650 is seen as the next potential support, as far as levels are concerned. He said that the 17,000-mark followed by 17,200 is likely to be seen as immediate resistance for the index.