Sensex up 78 points in pre-Budget rally

With the US Fed having raised the interest rate along expected lines, the markets once again shifted focus to expectations of an investor-friendly Budget, good corporate earnings due from next week and the revival of the monsoon.

The Bombay Stock Exchange Sensex closed the day 1.64 per cent (78.59 points) higher, its fifth rise in six sessions.

Thus, the Sensex has gained 230 points in the last six sessions to close at 4,874.05 on Thursday. In other words, a quiet pre-Budget rally is on.

Yesterday's surge was led by index heavyweights Reliance Industries, Oil and Natural Gas Corporation (ONGC), State Bank of India and Tata Steel. Automobile and cement stocks closed higher in anticipation of strong sales numbers in June.

The Tata Steel stock jumped 1.98 per cent to Rs 306.75 on fresh buying at lower levels after the company announced it plans to add 2.4 million tonnes to its existing capacity at the cost of Rs 7,800 crore.

On the National Stock Exchange, the S& P CNX Nifty index gained 2.1 per cent (31.60 points) to end at 1,537.20.

"With the uncertainty about the U.S. interest rate hike out of the way and expected Budget negatives also factored in to a large extent, institutions have stepped up their buying, as valuations are attractive," said Vipul Sanghvi, a senior manager of institutional sales at Fortis Securities.

"Investors have been sitting on piles of cash, are now expected to buy, at least until a couple of days before the Budget," he added.

The ONGC stock surged 5.99 per cent to Rs 666.95 on fresh buying as top world oil exporter Saudi Arabia boosted supply to cool prices.

The State Bank of India scrip ended 2.83 per cent higher to Rs 442.85, while the Reliance Industries stock gained 2.05 per cent to Rs 438.40 after the company revised product prices for July.

Apart from being a pure economy play, which should benefit if the monsoons are good, the SBI counter was in demand on reports that Indian lenders to the Dabhol power project are likely to buy out the foreign lenders.

Gainers outnumbered losers 953 to 668 in thin trades on the BSE. The turnover on the BSE dropped to Rs 1,768.04 crore as against Rs 2,179.15 crore on Wednesday.

In the NSE's derivatives segment, 282,563 contracts contracts worth Rs 7,690.01 crore were traded as against Rs 7,438.94 crore from 273,250 contracts traded on Wednesday.

Meanwhile, cement and auto stock gained on fresh institution buying. The Grasim Industries scrip increased 2.82 per cent to Rs 1,040 and ACC jumped 1.05 per cent to Rs 244.55.

Among auto stocks, Bajaj Auto gained 1.28 per cent to Rs 895.85 and Maruti Udyog added 0.68 per cent higher at Rs 405.30.