A smart rally in financial, FMCG and metal stocks, supported by strong global cues, pushed the BSE benchmark Sensex higher by nearly 200 points on Thursday to close at its highest level in two-and-a-half years.
Extending its upward journey for the second day, the 30-share barometer of the Bombay Stock Exchange ended with a gain of 197.82 points, or 1.08%, at 18,454.94, its best closing since February 5, 2008. In two days of rally, the Sensex has recorded a gain of 406 points. The National Stock Exchange’s 50-share Nifty index added 1.11 percent to settle at 5,540.20 points. Tracking firm Asian markets and positive cues from the Wall Street, the Sensex started the session on a strong note and never looked back.
During the day, the index moved between a high of 18,475.27 and a low of 18,276.50 mark. Marketmen said that buoyant investor sentiment spurred by better growth data for the US economy and an ease in the food inflation rate supported the rally. Snapping its downward trend, Reliance Industries, which carries the maximum weight in the Sensex, increased 1.25 per cent to finish at Rs 976.80. With a smart rally of about 5 per cent, cement major ACC topped the gainers pack. Banking stocks continued the rising streak for another day on hopes of strong lending growth.
“Overall, we expect banks to perform well on the top line front in the September quarter on the back of a better credit off take and largely stable margins,” domestic brokerage house Sharekhan said.
ICICI Bank led the gain among banking stocks and settled 4.58 per cent higher at Rs 1,014.45. HDFC jumped 3.65 per cent and HDFC Bank 2.19 per cent. SBI, however, ended in red with a loss of 0.25%. Brokers also said that banking stocks attracted buying as fall in food inflation will reduce pressure on the Reserve Bank to tame the high food prices.
Food inflation eased by over a percentage point to 10.35 per cent during the week ended August 7, but the fall may not prompt the Reserve Bank to reverse its tight monetary policy stance at the next review on September 16.
Metal stocks also attracted investment from fund houses, with Jindal Steel rising by 2.31 per cent, Hindalco by 2.10 per cent and Vedanta Group firm by Strelite Industries 0.94 per cent.
“Metal stocks were under-performing in the recent past, but now they have got momentum” Networth Stock Broking Head of Institutional Business Prakash Diwan said.
Bullish FII inflow is also helping the market to move northward, though a minor correction cannot be ruled out in the coming sessions, analysts.