India and Hong Kong Lead Asian Rally

Led by big gains in India and Hong Kong, Asian markets snapped sharply into the green on Tuesday.

In India, the BSE Sensex soared 878 points, or 5%, to 18,493 points, after regulators eased plans for a ban on overseas brokers trading in participatory notes by registering more foreign investors than expected onshore.

The "p-notes" enable foreign investors to buy shares on the Indian markets anonymously, and the proposed ban accounted for last week's 9% plunge in the Sensex.

"For just now, the fear is out of the market and the people who were sitting on the sidelines have started applying money back into the market," says Jayesh Shroff, a fund manager at $6-billion SBI Mutual Fund in Mumbai.

Shroff adds that those who were initially using the p-notes to buy shares have been a large segment of the buying.

Shares rallied across the board, as Tata Motors(TTM Quote) gained 3%, to 796 rupees, Icici Bank(IBN Quote) rose 3.6%, to 1,100 rupees, and HDFC Bank(HDB Quote) surged 7.4%, to 1,474 rupees.

Only technology stocks lost mildly, with Wipro(WIT Quote) down 0.49%, to 492 rupees, and Infosys(INFY Quote) off 0.17%, to 1,883 rupees, on profit taking.

"Essentially everything boils down to growth," says Sonal Varma, an economist at Lehman in Mumbai. "India is a strong growth story and we expect it to bounce back to 9% growth next year, from 8.9% this year." Varma added she does not expect any more policy rate hikes any time soon.