Sensex surges 4% past 12,000, aided by poll hopes
The Sensex bounced back to record a handsome gain of 475.04 points at 12,158.03, after touching the day's high of 12,193.63.business Updated: May 13, 2009 01:53 IST
The BSE Sensex rallied past the 12,000 mark on Tuesday, zooming 4 per cent, as investors bet that general elections would throw up a stable coalition government without Left parties that oppose liberal economic policies.
However, the rally raised eyebrows, coming on a day when industrial production data suggested a manufacturing recession, while overnight trends in global markets offered no fresh clue of an economic revival. Even politically, there was more of expectations than any prediction.
The 30-share Sensex rose 475 points, to 12,158 in the highest close since October 3, jumping after a choppy first-half in which the index slipped 0.5 per cent at one stage.
Nilesh Jasani, Research Analyst, at Credit Suisse, in a note, said “…….if either of the coalitions get over 200 seats directly this Saturday, the equity market could soar immediately — this would be deemed as a resounding victory.”
The Sensex had fallen more than 3.5 per cent in the previous two trading sessions. It has jumped 51 per cent since hitting a 2009 low in early March and is up
26 per cent this year after slumping 52 per cent in 2008.
Financial stocks including ICICI Bank and Axis Bank led the rally. ICICI Bank was up 6.7 per cent at Rs 558.65 per share, Axis Bank surged 8.2 per cent at Rs 483.40 and Housing Development Finance Corporation 7.7 per cent at Rs 1,841.35.
Reliance Industries Ltd and Infosys Technologies were also up by more than 5 per cent.
The market got a boost on expectations that the communist parties would not be required for support by the next coalition government. The last five years of Congress-led coalition rule hardly saw any reforms as the Left parties acted as hurdles to reform, particularly in disinvestments of public sector stakes.
The last phase of polling will happen on Wednesday and the exit polls soon after are likely to give good indications about the nature of the verdict, which would be known on Saturday. There could be some volatility after the exit poll results.