Jubilant rate sensitives help Sensex rally over 1%; log fourth straight positive close

Stock markets in India sustained the sanguine mood on Thursday helping the benchmark equity indices to enthusiastically rally by over four percentage points since the start of this week and quadruple the joy of closing in the positive territory.

Given that the key gauges managed to build over a percent gains over previous session’s close to three percent rally, bullishness seems to be returning to the markets as investors aggressively piled up positions in key heavyweight stocks ahead of a slew of key events in India and across the world. The spurt in benchmarks not only was due to sanguine leads from the global markets but also because of encouraging local cues like the appreciation in the beleaguered rupee and government’s reform push.

After the gap-up opening, the frontline gauges traded with strength for most part of morning trades, but investors showed signs of profit booking in late morning trades, dragging the key indices to day’s lows. Nevertheless, the key indices managed to rebound in style from those levels and eventually settle a tad below the important psychological 5,050 (Nifty) and 16,650 (Sensex) levels.

Sentiments remained sanguine since the start as domestic markets climbed in tandem with their regional peers as market participants remained influenced by sharp rally overnight in US markets where the Federal Reserve stated that the US economy maintained a moderate pace of growth as factory output rose and the real-estate market improved.

The markets also got buttressed by increasing hopes that central banks in US and Europe would employ monetary easing measures to revitalize their respective economies and avert a financial crisis. The European markets too exhibited positive cues as German and European Union officials firmed up efforts to rescue Spain's troubled banks and eased concerns to some extent.

Back home, investors resorted to largely across the board buying as they hoped government would push reforms and prop up investment sentiment. Meanwhile, Prime Minister Manmohan Singh’s effort to push for infrastructure led economic recovery too spurred some positive vibes that the government is taking serious steps to dispel perceptions that it is in policy paralysis.

Investors also drew some solace after Indian rupee, which has so far been the worst performing currency in Asia, appreciated for the fourth consecutive day against the US dollar. The rate sensitive Realty and Banking counter witnessed relentless buying in the session as they jumped over two percent and remained the top gainers in the BSE sectoral space on increasing hopes of monetary easing by RBI in its forthcoming mid-quarter policy review on June 18.

While other rate sensitive Auto sector too ended with notable gains of over a percent. Though largely across the board buying was evident, investors were seen exerting some selling pressure on Consumer Durables counter, which settled with moderate cuts of less than half a percent.

On the global front, leads from the markets across the globe too were supportive as benchmarks in Japan, Hong Kong and South Korea garnered significant gains. The European markets too traded on a positive note with all indices trading with around half a percent gains.

Back home, the NSE’s 50-share broadly followed index Nifty, accumulated over a percent gains to settle just shy of the psychological 5,050 support level while Bombay Stock Exchange’s Sensitive Index - Sensex rallied close to two hundred points to finish just below the crucial 16,650 mark. Moreover, the broader markets too settled on a positive note but went on to underperform their larger peers and closed with moderate gains of around half a percent.

The markets jumped on good volumes of over Rs 1.3 lakh crore while the turnover for NSE F&O segment also remained on the lower side as compared to that on Wednesday, at over Rs 0.9 lakh crore. The market breadth remained optimistic as there were 1,527 shares on the gaining side against 1,172 shares on the losing side while 125 shares remained unchanged.

Finally, the BSE Sensex soared 194.75 points or 1.18% to settle at 16,649.05, while the S&P CNX Nifty jumped 52.55 points or 1.05% to close at 5,050.65.

The BSE Sensex touched a high and a low of 16,680.59 and 16,519.89 respectively. The BSE Mid cap and Small cap indices climbed 0.72% and 0.46% respectively.

Sterlite Inds up 3.85%, HDFC Bank up 3.75%, ICICI Bank up 3.67%, DLF up 3.11% and Maruti Suzuki up 3.03% were the major gainers on the Sensex, while Wipro down 1.91%, TCS down 1.02%, GAIL down 1%, Hindalco down 0.62% and Cipla down 0.13% were only losers on the index.

On the BSE sectoral space, Realty up 2.19%, Bankex up 2.11%, Auto up 1.32%, Metal up 1.32% and Power up 1.10%, while Consumer Durables down 0.38% was the only laggard on the BSE sectoral space.

Meanwhile, in an attempt to improve global investment sentiment and counter perceptions that the government is in policy paralysis, India’s Prime Minister Manmohan Singh called upon a meeting of key infrastructure ministries and set ambitious targets as he rooted for infrastructure led economic recovery. After the meeting with ministers of power, railways, roads, shipping, civil aviation and coal, Manmohan Singh set an investment target of at least Rs 2 lakh crore for core sector projects in the current fiscal.

Though he admitted that after achieving remarkably fast growth rates in the last decade and emerging as the second-fastest growing large economy in the world, the economy ran out of steam because of global economic and geo-political turbulences. However, Prime Minister remained hopeful that Asia’s third largest economy would revert back to high growth trajectory of 9 percent expansion rate.

Monmohan Singh also opined that the government was not only aware of the challenges that are faced by the economy, but it is also taking crucial efforts to bolster the economy by creating an atmosphere which is conducive to investment and to removing any bottlenecks to growth. He also stated that there is need to revive business and investor sentiment and give a thrust to investment, both public and private.

He also vowed to remove the supply constraints that affect industry and trade. Emphasizing that India requires investment of over $1 trillion in infrastructure in next five years, he explained that government would not be able to invest this huge amount and hence high importance is being given to Public- Private-Partnerships (PPPs).

The S&P CNX Nifty touched a high and low 5,059.65 and 5,007.75 respectively.

The top gainers on the Nifty were JP Associates up 3.63%, Axis Bank up 3.59%, ICICI Bank up 3.54%, HDFC Bank up 3.52% and Sterlite up 3.47%.

On the flipside, Wipro down 2.51%, Power Grid down 1.14%, Ambuja Cement down 1.05%, GAIL down 1.01% and Ranbaxy down 0.98% were the top losers on the index.

The European markets were trading on a positive note, as France's CAC 40 climbed 0.61%, Germany's DAX advanced 0.55% and United Kingdom’s FTSE 100 ascended 0.69%.

Most of the Asian equity indices snapped the day’s trade in the green on Thursday on hopes for stimulus measures in the United States and Europe as well as promises of help for Spain’s banks. Moreover, Australian dollar climbed on strong employment data too supported the sentiments. However, the gains remained capped as decision by the European Central Bank to keep rates on hold disappointed investors.

Meanwhile, South Korean Kospi and Japanese Nikkei surged 2.56% and 1.24% respectively on Thursday on hopes of further stimulus measures from the United States and on signs that European policymakers could take concrete action to support ailing Spanish banks. However, Chinese Shanghai ended down 0.71%, setting a two-month low despite a morning rally, weighed down by concerns over slowing economic growth.