It was a spirited show by the markets. The Sensex touched 19k for the first time since January 2008, bolstered by a better-than-expected industrial production numbers in July and continued strength on the global front. The BSE benchmark infact surpassed the 19k mark at the very onset of the trading session and sprinted thereafter to wrap up at the highs of the day. The BSE Sensex ended at 19208, higher by a whopping 408 points or 2.1% and the Nifty ended at 5760, up 119 points. In what was a reversal of sorts, the midcap and smallcap indices underperformed the benchmark indices to end higher by 0.7% and 0.2% at 8112 and 10271 respectively.
According to the numbers announced over the weekend, the industry began the second quarter on a strong footing by clocking 13.8% growth in July. The growth rate — the highest in two months — exceeded market expectations of a moderate 7.8% and was driven by a strong showing by the manufacturing sector, particularly the capital goods segment.
Asian markets had a good showing on the back of encouraging economic data out of China and the United States and the introduction of new banking norms by the global banking regulators. The key benchmark indices in Hong Kong, South Korea, Taiwan, China, Indonesia, Japan and Singapore gained between 0.55% and 2% each. European markets such as CAC, DAX and FTSE also gave a thumbs-up to the new Basel III norms by rallying between 1% and 2% each, and trading in US index futures indicated that the Dow could surge 78 points at opening bell.
The BSE Sensex has appreciated 7% in this month, from 17,971 on August 31 to the 19k+ mark today, with ICICI Bank, Infosys, Reliance Industries, State Bank of India and Larsen and Toubro contributing 695 points or 56% of the 1,242 point gains .
The day clearly belonged to the banking sector, with as many as eighteen banks hitting lifetime highs. In new capital norms that were less stringent than feared, the Basel Committee on Banking Supervision representing regulators from 27 countries more than doubled its capital requirements for banks and gave lenders eight years for compliance and this drove up the banking stocks across the Asia-Pacific region. And back home, the upcoming credit policy meet scheduled on September 16 further added to the upbeat mood on the banking counters. Atleast going by market reports, the central bank is likely to hike the rates by 25 bps to check inflation and excessive borrowing.SBI ended at a life-time high of Rs 3147, stronger by 164 points or 5.5%, on the BSE. HDFC gained 5.3% at Rs 664, ICICI Bank added 4.4% at Rs 1097, HDFC Bank added 1.8% at Rs 2282 and Axis Bank added 3.3% at Rs 1424. In the metal space, Hindalco strengthened by 4.5% at Rs 190 and Tata Steel added 1.3% at Rs 601. And index heavyweight Reliance Industries inched closer to the 1000 mark yet again, adding 3.5% at Rs 992.
On the losers side, Wipro weakened by 1% at Rs 402, RCom shed 0.4% at Rs 162 and Hero Honda lost 0.2% at Rs 1727.
The market breadth was positive. Out of 3085 stocks traded on the BSE, there were 1510 advancing stocks as against 1449 declines.
According to Dinesh Thakkar, CMD, Angel Broking, “Strong IIP numbers, better than expected for the month of July’2010 fired the bourses, which inched up to cross the 19,000 mark, its highest in almost last three years. Robust growth in the manufacturing and services sector, along with accelerated agricultural decelopment, should help the economy to grow at the rate of 8.5% in FY2011."
