Market cheers UPA win: Sensex settles 838 points up

Market cheers UPA win: Sensex settles 5.94 % up
FIIs turn bullish; invest Rs 1,306.56 cr in equities

The government emerging victorious in the confidence motion gave bulls the much needed trigger to trample bears on Wednesday. Buoyant global cues following crude oil's further fall added to the upbeat mood. The confidence vote win in parliament meant that the government could revive stalled economic reforms. It also meant that the country could now go ahead and sign the civilian nuclear deal with the US which has the potential to significantly boost India's nuclear energy production. The euphoria was witnessed across the board. Power and capital goods cashed on to the prospects of the Indo-US nuclear deal while investors fancied banking stocks on expectations of more mergers and restructuring in the sector.

Crucial legislations in insurance and banking sectors and bills for setting up of a pension regulatory body and one for unorganised sector had been pending following opposition from the Left parties that had the government's hands tied down. But the sustainability of the current rally remains a question for many. Analysts cautioned that macro-economic issues, such as soaring inflation and growth slowdown, are likely to peg back sentiment. "It is too early to call it a secular bottom yet. Bear market rallies of such nature are typical. But that does not mean the rally will die in a day or two. In any case, the market was in an oversold territory which is why over the last few it has seen sustained buying.

So this can take it to north of 15,500 quite comfortably. However, gains are likely to be limited as economic worries still persist," said an analyst with a local brokerage. Further, the Reserve Bank of India's monetary policy review is due on July 29. After two surprise rate increases in June, many expect the central bank could either raise its key lending rate again. This could again dampen sentiment.

Bombay Stock Exchange's Sensex settled 5.94 per cent or 838.08 points higher at 14,942.28, just 58 points away from the 15000 mark. It soared to a high of 14,979.90 from a low of 14,568.22. National Stock Exchange's Nifty ended at 4476.80, up 5.58 per cent or 236 points higher. The broader index touched a high of 4491.55 and low of 4246.70 during the day. Secondline stocks also gathered momentum.

BSE Midcap Index gained 5.05 per cent to close at 5,615.94 and BSE Smallcap Index ended 4.23 per cent up at 6,812.64. Reliance Communications (12.12%), ICICI Bank (12.04%), HDFC (11.29%), State Bank of India (11.17%) and BHEL (10.86%) fronted the Sensex rally. Financial stocks were the star performers in Wednesday's trade with index heavyweights ICICI Bank (11.64%), HDFC (10.92%), State Bank of India (10.45%) and HDFC Bank (9.57%) stealing the show.

Other gainers in the 30-share index comprised Reliance Communications (12.2%), BHEL (10.92%), Reliance Infrastructure (10.36%) and DLF (9.12%). Cipla (-2.21%) and Hindustan Unilever (-0.65%) were the only frontline stocks that disappointed. Market breadth was impressive with 2270 advances outnumbering 436 declines on BSE, while on NSE, there were 1176 gainers and 111 losers. Meanwhile, oil continued its retreat on Wednesday, with US crude oil futures down $2.51 at $125.94 a barrel as fears that Hurricane Dolly would hit Gulf of Mexico crude supply faded. The drop in oil prices, which is now down more than $20 after hitting a record above $147, eased recent concerns over inflation and rising costs for companies.

ADAG cos among top traded counters
Oil prices fall past $126 a barrel
Higher FDI in insurance likely soon
Rupee too cheers UPA trust vote victory
Markets greet govt win with relief, stocks hit a month high
Sensex surges 838 pts as bulls go on rampage
Kamat Hotels to expand ecotels
Era Infra bags NATRIP contract
Infotech Enterprises Q1 net up
Sesa Goa Q1 net up at Rs 633 cr



Source:ET,sify