Rises 623 points, as auto, financial sector stocks gain on fading rate rise fears
Indian shares surged today, led by interest rate-sensitive sectors, on expectations that the government’s intention to control fiscal deficit and lower borrowings may help tackle inflation and thus lower the pressure on interest rates.
Strong manufacturing data for February, expectations that the Libyan crisis may be resolved and gains in the Asian markets also boosted sentiment.
Yesterday, the Sensex had surged close to 600 points intra-day after the Budget, but fell steeply later as concerns surfaced over some of the measures announced by Finance Minister Pranab Mukherjee.
The Bombay Stock Exchange (BSE) Sensex today surged 623.10 points, or 3.5 per cent, to 18,446.50. At the National Stock Exchange, the 50-stock Nifty rose 189 points, or 3.54 per cent, to 5,522.30.(Click here for graph)
This was the steepest gain in percentage point terms for both Sensex and Nifty since May 27, 2009.
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“The sentiment has become positive after the Budget,” said Mayank Shah, chief executive officer, Anagram Capital. “The government’s fiscal deficit and net market borrowing targets for 2011-12 are positive surprises,” he added.
The government aims to rein in fiscal deficit at 4.6 per cent of the gross domestic product and borrow Rs 3.43 trillion from the money market in 2011-12, according to the Union Budget announced yesterday.
Both foreign and domestic institutional investors were net buyers with purchases of Rs 418.51 crore and Rs 95.64 crore, respectively, provisional BSE data showed.
India’s purchasing managers index, compiled by HSBC, stood at 57.9 points in February, up from 56.8 points in January. A figure above 50 indicates expansion.
Among the major Sensex gainers were Mahindra & Mahindra, which surged 8.36 per cent to Rs 665.45. Maruti rose 7.14 per cent to Rs 1,292.90 and Jaiprakash Associates put on 7.10 per cent at Rs 83. Hindalco, ICICI Bank, L&T, Tata Motors and Bajaj Auto gained more than 5 per cent each.
Rate-sensitive sectors — auto, banking and real estate — were the major beneficiaries. Among sectoral indices on BSE, auto (up 5.64 per cent), Bankex (up 4.35 per cent) and realty (up 4.20 per cent) were the top gainers. All other sectoral indices also ended in the positive territory.
“The rally was more due to speculation that the crisis in Libya will end soon,” said Ambareesh Baliga, the vice-president at Karvy Stock Broking.
The market breadth was positive with nearly three stocks rising for every decline.
Earlier, major Asian markets ended in the green on falling oil prices and better-than-expected personal income data in the US. Japan’s Nikkei 225 rose 1.22 per cent, Hong Kong’s Hang Seng advanced 0.25 per cent, China’s Shanghai Composite gained added 0.48 per cent and Taiwan’s Taiex put on 1.49 per cent.