Guided by strong global cues spreading from Wall Street to Asia Pacific, domestic equity benchmarks of Bombay Stock Exchange and National Stock Exchange rebounded on a mix of value buying and short covering by market participants in Dalal Street on Thursday.

Analysts attribute the global recovery to overnight rise in Dow Jones and S&P 500 by 1 per cent and 1.34 per cent respectively.

Wall Street investors reportedly snapped up most valued shares such as Facebook, Amazon and Apple brushing aside strong US economic data which also pointed at potential increase in inflation.

The buoyancy spilled over to Asian markets in early morning trade, say analysts. Domestic fundamentals such as moderation in CPI two days ago and WPI or wholesale price index linked inflation on Thursday and steady upside in IIP or index of industrial production for December at 7.1 per cent also boosted market confidence, say analysts. WPI for January softened to 2.84 per cent from December’s 3.58 per cent.

The 30-share Sensitive Index of Bombay Stock Exchange and 50-scrip Nifty of NSE increased in tandem with Asian peers and held on to their day’s gains. Significantly, the market took in its stride the alleged `11,000 crore fraud in Punjab National Bank which was detected by its management in the course of inspection.

PNB stock did lose further ground under continuing selling pressure by investors. Since Wednesday the stock is nearly 9 per cent down. However, other banks shares gained along with metal and IT stocks which contributed to Thursday’s relief rally.

The market lauded PNB management’s decisive action to hand over the investigation into the $1.8 billion fraud to Central Bureau of Investigation and Enforcement Directorate. Dalal Street also welcomed ED raids on diamond trader Nirav Modi and a few more jewellers on Thursday morning.

D Street buzz suggests on the basis of LoUs issued by two rogue officials of PNB other banks such as Union Bank of India, Allahabad Bank and Axis bank too offered to extend credit to Modi , his wife Ami and brother. Over the last week, PNB had already cautioned other lenders against opening credit lines to at least three firms owned/run by Mr Modi. The first FIR filed by CBI has been for a `280 crore fraud reported to it by PNB in January.

Based on that FIR , ED on Thursday carried out searches and seizures at Modi’s home in Kurla and showrooms at Kala Ghoda (Colaba), Bandra, Lower Parel, Surat and Defence Colony in Delhi.

However, sources in these agencies say the wanted diamond trader is missing. Analysts have ruled out the possibility of free-fall in PNB stock since it is traded mostly in F&O derivatives market. Stocks of other top lenders gained as investors opted to pick them up on dips.