Sensex gains 474pts in relief rally

After almost six weeks of persistent weakness, the bulls today heaved a sigh of relief as the markets logged back-to-back solid gains. Friday's pull-back did not turn out to be a one-day wonder as in the past six weeks, but the in fact the markets carried from where it left on Friday was very heartening to see.

Peace in Egypt which triggered a rally in world markets, helped sentiment and given the oversold conditions the bounce back in our markets was far more stronger. The Sensex opened with a positive gap of 211 points at 17,940. Heavy buying in capital goods, FMCG and auto space drove the BSE benchmark index to a high of 18,227. The Sensex finally settled with a gain of 474 points at 18,202 - closing above the 18,000 mark after four trading sessions.

In the process, the index has now recovered 907 points from it's low of 17,295 in a matter of just two trading days. For the record, the index had slumped 3,369 points (16.3%) in the preceding six weeks.

Meanwhile on the economic front today, India's wholesale price index (WPI) rose an annual 8.23% in January on higher food prices, government data showed on Monday. The figure exceeded the median forecast for an 8.05% rise in a Reuters poll and was lower than the annual rise of 8.43% in December.

Further, the annual reading for November was upwardly revised to 8.08% from 7.48%. Also on Friday, India's annual industrial output growth slumped to 1.6% in December, a 20-month-low from 3.62% in the previous month.

Asian stocks rose on Monday as investors greeted news of Egyptian President Hosni Mubarak's resignation with relief. Hang Seng surged 1.2% to 23,121. Shanghai Composite jumped 2.5% to 2,898. Markets in Japan and Korea also soared over 1% each.

Back to markets, the rally was very broad-based. The BSE Mid-cap and Small-cap indexes rallied 3.5% and 4%, respectively. Among the sectoral front, capial goods, auto and metals stole the show.

The market breadth was also largely positive - out of 3,003 stocks traded today, 2,327 advanced and 514 declined on the BSE.

The shares of fast moving consumer goods (FMCG) companies have  rallied on bourses on end to the Egypt crisis. United Spirits and United Breweries soared 15% and 11%, respectively. Marico, Nestle, Tata Global Beverages jumped 3-4% each. Sensex stocks - HUL and ITC were up 1.5% each at Rs 273 ad Rs 157, respectively.

Larsen & Toubro was the biggest contributor to the rally. The stock soared 6.7% to Rs 1,661. ICICI Bank and Infosys also contributed around 40 points each.

Jaipraksh Associates zoomed 7% to Rs 87. Tata Motors jumped 5.6% to Rs 1,208 following a strong Q3 performance. The consolidated net profit jumped to Rs 2,424 crore for the quarter ended December 31, 2010, beating market forecasts. Net profit in the year-ago period stood at Rs 650 crore profit. Consolidated net sales for the quarter grew to Rs 32,544 crore, an increase of 22% over the Rs 26,678-crore net sales in the same quarter a year earlier.

BHEL, Jindal Steel, SBI and Tata Steel gained 4% each. Hindalco, Hero Honda, Tata Power, HDFC and Bajaj AUto were yo 3% each.

Other gainers included Maruti Suzuki, Bharti Airtel, Sterlite and TCS.

However, DLF dropped marginally to end in red at Rs 246.