D-Street cheers fall in inflation, Sensex surges 107 points
Stock markets rallied for the third-straight session today and the bellwether Sensex ended with a gain of 107 points on buying across counters amid hopes that dip in inflation rate will lead the Reserve Bank to halt the tightening of key policy rates for now.business Updated: Dec 14, 2010 18:29 IST
Stock markets rallied for the third-straight session on Tuesday and the bellwether Sensex ended with a gain of 107 points on buying across counters amid hopes that dip in inflation rate will lead the Reserve Bank to halt the tightening of key policy rates for now.
After a highly volatile trade, the Bombay Stock Exchange (BSE) barometer index Sensex finished 107.41 points or 0.55% higher at 19,799.19, driven by buying in the second half after inflation figures for November showed a drop to an 11-month low at 7.48%.
The National Stock Exchange's (NSE) wide-based Nifty too witnessed a similar trend and ended at 5,944.10, up 36.45 points or 0.62% from previous close.
Analysts said investors regained confidence on fall in the inflation rate, which was reflected in the buying interest back home despite the weak opening on the European bourses.
"The softening trajectory could mean that inflation could reach 6-6.5% by March 2011. We expect RBI to maintain a pause in the near term given significant tightness in liquidity situation." Edelweiss Securities Head-Research Nischal Maheshwari said.
Sterlite Industries gained 3.46%, buoyed by the Supreme Court decision to extend its stay over the Madras High Court order directing the copper producer to close its smelting plant at Tuticorin in Tamil Nadu for alleged violation of environmental norms.
Tata Steel and Hindalco counters surged 2.33% and 1.44% respectively. "Metal counters surged primarily on the back of firming copper prices in China," Geojit BNP Paribas Financial Services Research Head Alex Mathews said.
He also said that short covering, ahead of the third quarter advance tax numbers to be released tomorrow, helped the upswing on the Dalal Street.
Significant gains in the country's most valued firm Reliance Industries and engineering giant Larsen & Toubro were instrumental in the overall Sensex gain. While RIL jumped by 1.04%, the latter saw a rise of 1.48%.
Banking counters also cheered the headline inflation data, with the country's largest lender SBI advancing by 1.66% and the private sector player ICICI Bank rising marginally by 0.03%.
Twelve of the 13 sectoral indices ended the day in the positive terrain, with the auto index emerging as the biggest laggard, mainly due to 3.3% dip in the motorcycle giant Hero Honda.
The counter fell on selling pressure amid media reports that its JV partner Honda of Japan is likely to finalise the exit from the joint venture next week.