Markets surge in the opening trade led by strong cues from global markets after crude prices eased. The Nifty index was just a tad away from 5600 mark, up 56 points, at 5990 and the Sensex advanced 189 points, at 18,675.
Easing oil prices lifted investor sentiment and ignited rally on Wall Street. Dow Jones Industrial Average clocked its highest gains since December 1st bouyed by strong employment data. Unemployment claims fell by 20,000 to 368,000 for the week ended February 26. The Dow Jones Industrial Average surged 1.6%, at 12,258; the S&P 500 Index surged 1.7%, at 1,331 and the Nasdaq Composite Index added 1.8%, at 2,799.
Asian markets were trading higher led by solid overnight gains on Wall Street. Hong Kong's Hang Seng was up 1.1% on back of buying across sectors; banking and energy shares were the biggest gainers. Japan'e Nikkei 225 was up 1.6% supported by exporter shares and South Korea's Kospi Composite advanced 0.8%. However, China's Shanghai Composite was marginally in the red, down 0.1%.
Indian markets have been rallying after the budget due to some institutional buying. Kishor Ostwal , CMD, CNI Research said, "seeing a lot institutional buying after the budget and some FIIs (Foriegn Institutional Investors) that did not participate in the Indian markets feeling that were over heated are entering now."
FIIs are investing in India after the Budget 2011-12 which emphasized on fiscal consolidation. As per the provisional data, the FIIs were net buyers of Rs 229 crores in the cash market yesterday, while they were net buyers of Rs 1,166 crores in futures and options. Ostwal added, "overseas investors first check if the country has potential to default. Under this arena, Finance Minister has brought down debt to GDP ratio from high of 53% to 43%. Hence, international investors see if debt to GDP ratio is low, they feel that the country is doing well."
Rate sensitive BSE Banking and Auto indices lead the gains, up 1.9% and 1.5% after inflation eased yesterday to 10.4% yesterday for the week ending February 19. From the auto pack, Hero Honda was in the top gear, up 2.2%, Mahindra and Mahindra advanced 1.8% and Tata Motors was up 1.3%. Investors cashed in on Axis Bank, up 2.6%, ICICI Bank was up 2.5% and Kotak Mahindra Bank zoomed 2.2%.
Among individual stocks PFC (Power Finance Corporation) was up 5.5% on reports that it may raise up to $1 billion (around Rs 4,500 crore) in external debt in fiscal year 2011-12. PNB (Punjab National Bank) gained 1.3% strength in the opening trades on news that the it will buy equity stake or foray into life insurance companies. Aurobindo reversed losses and was up 2.3% fter reports that four products from the company's units were under the scanner of US food and drug regulator.
Oil Market Companies BPCL, HPCL and IOC were down marginally, between 0.3-0.5% even though Brent crude eased from an high of $118 to $115.4/bbl.
Top gainers on the Sensex were Tata Power, up 2.6%, ICICI Bank surged 2.5% and Bajaj Auto was up 2.2%. Only three components on the Sensex were trading in the red, Bharti Airtel, down 0.5%, ONGC, down 0.1% and ITC, down 0.1%.
From the broader markets, midcap and smallcap indices were up 1% and 0.9% each. Market breadth was positive, 1128 stocks advanced for 326 stocks which declined.