The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) crossed the 20,000 points mark for the first time since January 2011 in early morning trade, a day after the union government's decision not to implement till 2016 the new tax avoidance law announced in the budget of 2012-13.
The sentiments were also high as the country's general inflation in December, which was released Monday, had showed moderation of a three-year low, giving hope to the industry for a possible rate cut by the central bank, even as industrial output contracted by 0.1 percent in November.
Major indices like automobile, bank and fast moving consumer goods (FMCG) made considerable gains while profit booking trend in metal, oil and gas and public sector undertaking (PSU) stocks led to a selling spree.
The BSE Sensex, which opened at 19,999.82 points, was at 19,923.17 points around 1.30 p.m. -- up 16.76 points or 0.08 percent from its previous close at 19,906.41 points.
The BSE Sensex touched an intra-day high of 20,007.90 points and a low of 19,881.78 points.
More From This Section
The BSE midcap index was up 12.67 points, while the smallcap index was higher by 6.39 points.
The wider 50-scrip S&P CNX Nifty of the National Stock Exchange (NSE) was also trading flat -- up 5.25 points or 0.09 percent at 6,029.30 points.
The equities market are on a high after Finance Minister P. Chidambaram Monday had said that the government would only implement the General Anti-Avoidance Rules (GAAR) from April 2016 rather than the earlier scheduled April 2014.
Meanwhile, latest data on the country's general inflation trend showed a fall; it stood at 7.18 percent in December as compared to 7.24 percent in the previous month, owing to softening in power and fuel prices. The inflation rate for the last month moderated to its lowest levels since December 2009.
Moderation in inflation would give some relief to the policymakers who have been struggling to balance the need for controlling inflationary pressure and stimulate the economic growth.
Inflation has remained at an elevated level despite a tight monetary policy adopted by the Reserve Bank of India (RBI). There will be pressure on the RBI for rate cuts in its quarterly review of monetary policy for 2012-13 on Jan 29, 2012.
The RBI has kept key lending and borrowing rates unchanged, saying inflation remained sticky and might rise further.
In the Sensex sectoral indices, automobile index was up 31.01 points, followed by bank index, which was higher by 29.09 points and FMCG index which gained by 25.84 points.
In terms of losers, metal index was down by 57.60 points, while the oil and gas index was down 31.73 points and PSU index was lower by 13.51 points.
Among other Asian markets, Japan's Nikkei was up 0.72 points, Hong Kong's Hang Seng was lower by 0.14 percent and China's Shanghai Composite Index was higher by 0.60 percent.