India's Sensex Surges 500 Points on BoJ's Surprise Stimulus Move

Indian stock markets added nearly 2% on 31 October, as the Japanese central bank's unexpected expansion of its aggressive stimulus programme raised hopes for additional foreign inflows.

The benchmark S&P BSE Sensex share average finished 519.50 points, or 1.9%, higher at 27,865.83 points, after striking a record high of 27,894.32 in intra-day trade.

The Nifty finished 153 points, or 1.87%, higher at 8,322.20 after hitting an all-time high of 8,330.75 in intra-day trade.

Capital Economics said in a note to clients: "It always looked likely that the Bank of Japan would be forced to step up its pace of easing but the change of tack has come sooner than the market (or we) had expected. Given the recent downward trend in inflation, the Bank could well end up increasing its asset purchases again next year..."

Capital Economics said in a separate note: "...The Bank of Japan's announcement [on 31 October]...is a timely reminder that not everyone has to follow the Fed. We would be wary of speculation that an outflow of Japanese money will lift bond markets elsewhere. Nonetheless, further QE in Japan should help to support equity prices worldwide and especially in the euro-zone if expectations build that the ECB will follow with full-blown QE of its own..."

Earlier in the day, the Bank of Japan (BoJ) stunned the markets by announcing it will expand its massive stimulus programme, rolled out 18 months ago.

The BoJ will now buy assets at an annual pace of about 80tn yen, an increase from the previous 60tn to 70tn yen target range.

India's Sensex and Nifty added 4.88% and 4.74% respectively in October, marking eight months of gains in nine for the indices.