Sensex ends 293 points higher
Re posts biggest single-day gain since 1998
Indian equities extended the pull-back rally on Tuesday, outperforming Asian peers, as sentiments turned bullish in realty, infrastructure a nd banking sectors after public sector banks agreed on cut in interest rates. In a meeting with the chiefs of state-owned banks, Finance Minister P Chidambaram hinted that after RBI’s initiative to cut rates it was their turn to reciprocate to keep the realty and infrastructure growth ticking. In the meeting, PSU banks reached a consensus to cut interest rates on advances by 75 basis points and on deposits by 50 bps. The banks that announced reduction in benchmark prime lending rates by 50 basis points include the country's third largest lender, Punjab National Bank, and others like UCO Bank, IDBI Bank and Union Bank of India. State Bank of India is likely to follow suit by next week. This had a positive impact on the markets, which had turned volatile after a weak opening, and surged sharply in the last hour of trade. “Domestic liquidity crunch has been obstructing the pace of Indian economy for the past few months. Though the credit growth was high, it was not directed to the productive sectors. The problem was not only the higher cost of borrowings, but also the availability of the same. Banks with sufficient funds were also not lending to because fear of default. After today’s meeting between the finance minister and PSU banks, banks are likely to soon start cutting their PLR rates by 50-75 bps and private sectors banks are expected to follow suit. We also expect banks to cut their deposits rates simultaneously,” said Krupesh Thakker, analyst-economy, at India Capital Market. “The direct beneficiaries will be highly leveraged sectors like infrastructure, capital & engineering companies as their borrowing cost would come down. However, the SME segment would benefit the most because they lacked any alternate source of funds. We further expect the interest rate sensitive industries to witness rise in demand as the retail segment lending rates will too come down,” Thakker added. BSE Realty Index closed 12.14 per cent higher, BSE Bankex ended up 6.56 per cent and BSE Power Index climbed 5.66 per cent up. However, BSE IT Index ended 4.33 per cent lower ahead of presidential elections in the US.
Bombay Stock Exchange’s Sensex closed at 10,631.12, up 293.44 points or 2.84 per cent. The index touched a high of 10,668 and low of 10,116.22. National Stock
Exchange’s Nifty ended at 3142.10, up 98.25 points or 3.23 per cent. The broader index touched an intra-day high of 3,152.30 and low of 2,985.
BSE Midcap Index was up 2.70 per cent and BSE Smallcap Index moved 2.75 per cent higher. DLF (17.13%), Jaiprakash Associates (9.58%), Ranbaxy Laboratories (9.27%), Tata Power (8.47%) and ITC (8.45%) were the top Sensex gainers. Satyam Computers (-7.41%), TCS (-7.38%), Wipro (-4.80%), Infosys Technologies (-3.32%) and Sterlite Industries (-2%) were the losers. Market breadth was positive on the BSE, with 1,806 advances and 782 declines. Shares of Suzlon Energy surged 20.57 per cent after the company and Martifer said they were negotiating a schedule for the wind energy major to buy 22.48 per cent stake of Matifier in Germany's REpower. Airline stocks ended higher after state-owned refiners reportedly reduced ATF price by 4.5 per cent responding to government’s decision to exempt jet fuel from customs duty. Jet Airways closed 6.23 per cent up, Kingfisher Airlines ended 3.55 per cent higher and SpiceJet closed 4.83 per cent up. Meanwhile, relief rally in the global markets seems to be far from over. European markets rallied FTSE 100 was up 1.78 per cent, CAC was up 2.17 per cent and DAX gained 2.02 per cent. As the US wakes up to choose the next president, Wall Street showed signs of positive open. Dow Jones futures were up 1.96 per cent, Nasdaq futures were 2.42 per cent higher and S&P 500 futures moved 2.11 per cent up.
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Sensex recoups from early losses to end higher by 293 points
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Sensex gains 293pts; DLF zooms 15%, tech stocks tumble
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Source:ET