D-street witnesses a breath-taking rally; benchmarks surge 2%

Indian equity indices showed renewed enthusiasm as they vehemently rallied by two percent to end near intraday high, re-conquering the psychological 5,300 (Nifty) and 16,650 (Sensex) levels in the session. Hyperactive bulls aggressively piled up positions in not only heavyweight stocks but in the broader markets too, spurred by a world-wide rally in risky assets. There appeared no trepidation in the session either from the domestic or global front as market sentiment was buoyed after ECB President Mario Draghi announced an unlimited bond-buying plan to cut borrowing costs of highly indebted nations such as Spain and Italy.

The gauges traded with an enormous traction throughout the session despite PSU OMCs reversing their intraday gains as fuel price hike hopes after the monsoon session of Parliament were quashed by Oil Minister’s statement. Petroleum Minister Jaipal Reddy stated that the state-run oil companies don’t have an immediate plan to increase fuel prices, sparked concerns about India's high fiscal and current account deficit. On the other hand, Auto stocks got plenty of relief on Oil Minister ruling out the possibility of immediate fuel price hike. The sentiments also remained higher supported by Metal stocks which strengthened global commodity prices rose on September 6, 2012, after European Central Bank took major steps to ease Europe’s financial crisis.

Global cues too remained jubilant as European counters traded in green in early deals after the European Central Bank outlined its bond buying scheme in an attempt to draw a line under the region's debt crisis. Stronger-than-expected jobs data from US private sector, which bode well for the key US non-farm payroll figures due out on Friday, also encouraged investors to cover their bearish bets. Moreover, all the Asian markets closed with solid gains amid reports that Chinese authorities have launched a slew of infrastructure projects to try and shore up growth in the world's second largest economy.

Back home, banking sector too provided spirit to the markets, surging over two percent tracking gains in global financials triggered by European Central Bank’s bond-buying plan which is aimed at lowering struggling euro zone countries' borrowing costs. Moreover, software stocks like, Infosys, TCS, Wipro, HCL Technologies and Tech Mahindra all edged higher after ECB took major steps to ease Europe's financial crisis.

The NSE’s 50-share broadly followed index Nifty, rose by over one hundred points and ended tad below the psychological 5,350 support level while Bombay Stock Exchange’s Sensitive Index - Sensex moved up by a whopping three hundred and forty points to finish above the psychological 17,650 mark. Moreover, the broader markets too traded with traction and ended the session with a gain of about a percent.

The markets rose on overall volumes of over Rs 1.30 lakh crore, which remained on the higher side as compared to that on Thursday. Moreover, the market breadth remained in favor of advances as there were 1,766 shares on the gaining side against 1,096 shares on the losing side while 137 shares remain unchanged.

The BSE Sensex rallied 337.46 points or 1.95% to settle at 17,683.73, while the S&P CNX Nifty climbed by 103.70 points or 1.98% to close at 5,342.10.

The BSE Sensex touched a high and a low of 17,701.20 and 17,575.79 respectively. However, the BSE Mid cap index was up by 1.14% and Small cap index up by 0.76%.

Tata Steel up by 5.72%, ICICI Bank up by 4.68%, Tata Motors up by 4.40%, L&T up by 3.86% and Hindalco Industries up by 3.39% were top gainers on the Sensex, while there was no loser on the index.

The major gainers on the BSE sectoral space were, Capital Goods (CG) up 3.04%, Realty up 2.70%, Metal up 2.66%, Bankex up 2.29% and Auto up 1.99%, while there was no loser on the BSE sectoral space.  

Meanwhile, rubbishing the reports about oil price hike in the near term, Oil Minister S Jaipal Reddy said that, ‘there is no immediate plan to raise domestic fuel prices.’ Throwing the ball in Cabinet’s court, Oil Minister further added that it was now up to the cabinet to decide on the onerous issue of reducing hefty subsidies on diesel, cooking gas and kerosene.

Both oil and finance ministries have been pitching hard for a rise in fuel prices, since their subsidies are drag on India's fiscal deficit at a time of slowing growth. India is targeting a fiscal deficit of 5.1 per cent of GDP for this fiscal year. But a higher subsidy bill and lower tax revenue have resulted in its fiscal projections for 2011-12 go awry. The fiscal deficit of the country was 5.8 per cent in 2011-12, wider than the initial target of 4.6 per cent.

Taking a U-turn from his ministry’s earlier stance, Jaipal Reddy said that floating a cabinet note is different from taking action and no decision has been taken yet on fuel prices. With oil firms losing a record Rs 560 crore per day on sale of regulated diesel and cooking fuels and another Rs 16 a day on petrol, the Oil Ministry recently moved a note for the consideration of the Cabinet Committee on Political Affairs (CCPA) explaining the wobbly situation surrounding the oil sector.

Meanwhile, besides hike in diesel, cooking gas and kerosene prices, the Oil Ministry is also seeking to limit supply of subsidized LPG cylinders to 4-6 per household in a year. However, what government does as measure to avert a fiscal disaster and a sovereign credit downgrade to junk by global rating agencies remain a factor to watch for.

The S&P CNX Nifty touched a high and low of 5,347.15 and 5,309.20 respectively.

The top gainers on the Nifty were DLF up by 5.71%, Tata Steel up by 5.55%, ICICI Bank up by 4.58%, L&T up by 4.25% and Tata Motors up by 4.05%. On the flip side, BPCL down by 0.53% and Ranbaxy down by 0.03% were only losers.

The European markets were trading in green, France's CAC 40 up by 1.17%, Germany's DAX was up by 0.88% and United Kingdom’s FTSE 100 was up by 0.21%.

Asian shares ended with their biggest daily gain in six weeks on Friday on the back of celebratory mood in global markets after European Central outlined its bond-buying scheme to help calm the euro zone's debt crisis. Meanwhile investors covered their bearish bets as stronger-than-expected jobs data from U.S. private sector indicated good growth in the key U.S. non-farm payroll figures due out on Friday. Japan's Nikkei climbed around 2% on Friday to its biggest one-day percentage gain in five months.