Benchmark share indices ended over 2% on Friday and the rupee appreciated sharply, shrugging off higher-than-expected August inflation, after the government's bold move to increase diesel prices and the US Fed's announcement of a third round of quantitative easing sparked off a rally in global stocks.
The 30-share Sensex provisionally ended up 420 points or 2.3% at 18,441 and the 50-share Nifty ended up 132 points or 2.6% at 5,567.
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(Updated at 14:25hrs)
Benchmark indices have reached near day highs led by consistent buying demand among index heavyweights and rate sensitive counters. Firm opening of the European markets has further cheered the sentiments among local investors.
Interest rate sensitive counters are witnessing strong buying demand on hopes that cut in key policy rates by the central bank.
By 14:20, the 30-share Sensex was up 436 points at 18,457 and the 50-share Nifty gained 135 points at 5,570. The Sensex and the Nifty have reached an intra-day high of 18,471 mark and 5,575 levels, respectively so far.
On the global front, Japan's Nikkei average climbed 1.8% on Friday to its highest level in three weeks, gaining a foothold above 9,000 after bold plans for stimulus from the U.S. Federal Reserve boosted risk appetite and lifted battered cyclical stocks.
European markets have opened firm with CAC, DAX and FTSE declining between 1-2%.
Back home, Inflation rose to 7.55% in August as prices of potato, wheat and pulses as well as manufactured items soared, which may restrain RBI from cutting interest rates at its monetary policy review next week.
On the sectoral, BSE Realty index has surged by almost 5% followed by counters like Banks, Metal, Auto, Capital Goods, Oil & Gas, PSU, Power, IT and Consumer Durable, all gaining between 1-3%. However, BSE FMCG and Healthcare indices have declined between 0.3-1%.
Real Estate segment have gained ground on anticipations that the RBI will cut interest rates to support the slowing economy. DLF, Anant Raj Inds, Indiabulls Real, HDIL and Unitech have surged between 2-8%.
Banking shares are in limelight with most of the frontline stocks rallied up to 10% on hopes of interest rates cut.
The government's move to raise diesel prices provides room for Reserve Bank of India (RBI) to ease monetary policy to give thrust on growth. The RBI scheduled to meet on Monday to review the monetary policy.
Among the individual stocks, ICICI Bank has hit 52-week high and rallied up to 10% at Rs 1,055 on the NSE. SBI is and HDFC are up between 2-5%.
Shares of metal companies have surged more than 3% each after the U.S. Federal Reserve announced another aggressive stimulus plan to buy mortgage-related debt and other assets until the outlook for jobs improves.
Hindalco Industries, the largest gainer among metal pack, surged 8%. Jindal Steel and Power has rallied 8%, Sterlite Industries and Tata Steel up 6% each, while Sesa Goa, Hindustan Zinc, Steel Authority of India and JSW Steel are trading higher in the range of 3-4%.
From the Auto space, Tata Motors, Maruti Suzuki, M&M, Bajaj Auto and Hero Moto have gained between 2-5%.
Larsen and Toubro (L&T) has surged 5% to Rs 1,488, extending 4% gain in past two trading sessions on the Bombay Stock Exchange.
Other notable gainers include Tata Power, GAIL, RIL and Infosys.
The broader markets are under performing the benchmark indices, both gaining by 1%.
The overall market breadth in BSE remains marginally positive with 1,495 shares advancing and 1,322 shares declining.
