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| Sensex snaps falling streak on low inflation, stimulus hopes |
| Press Trust Of India / Mumbai Dec 05, 2008, 00:54 IST |
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The Bombay Stock Exchange Sensitive Index jumped 482 points to regain the 9,000-level On Thursday, snapping a five-day falling streak. Solid buying, sparked by a further fall in inflation and expectations of a huge stimulus package by the Central Government boosted the bellwether index.
Brokers said the good news about inflation came as double cheer for investors, who now expect banks to further cut interest rates.
They said sentiment was already looking up on strong hints that the government would announce a multi-crore package on Saturday to shore up the economy, particularly exports and housing sectors, which are reeling under the financial turmoil.
The 30-share BSE Sensex settled the day at 9,229.75, a rise of 482.32 points or 5.51 per cent over its previous close, after rising throughout the session.
Hectic buying was seen across counters and all sectoral indices closed higher for the day. With the government giving housing special attention and trying to give the sector a boost, realty zoomed 12.44 per cent.
Tata Steel’s continuing attraction pulled up the metal index by 7.93 per cent while consumer goods index was up by 6.91 per cent. Oil & gas and Sterlite Power indices also ended up by close to six per cent.
Marketmen said there have been buying activities in the past few days but trading was mostly choppy for one or other reason. On Thursday, fall in inflation and the government’s efforts to rejuvenate the economy gave a clear direction to bourses, resulting in the gain.
The broader 50-share Nifty of the National Stock Exchange also flared up by 131.55 points or 4.95 per cent to close at 2,788.00 from its last close.
With interest rates expected to be slashed, bank shares too surged pulling up the sectoral index by 5.64 per cent. While private sector lender ICICI Bank surged 8.75 per cent, the country’s largest bank State Bank of India closed 6.55 per cent up.
The government is expected to also announce a cut in excise rates for commercial vehicles on Saturday while the Reserve Bank of India (RBI) will signal banks to reduce lending rates on home, personal and other loans.
Experts said RBI is now certain to cut short-term lending (repo)and short-term borrowing (reverse repo) rates, now that inflation is down again.
European markets, which were trading higher by 1.5 -2.0 per cent in early trade, also boosted sentiment here. Asian indices, however, ended mixed with Strait Times up 1.21 per cent and Shanghai Composite by 1.84 per cent.
Among Sensex gainers, India’s largest private sector steel producer, Tata Steel, soared by 13.84 per cent. Other prominent gainers included Jaiprakash Associates at 13.77 per cent. Belying the falling sale in auto industry, Tata Motors too gained a handsome 13.29 per cent.
Realty major DLF gained 11.28 per cent, while Sterlite Ind rose 9.90 per cent. The heaviest among them all, Reliance industries (RIL), soared 8.40 per cent.
The market breadth remained extremely positive as 1,503 counters registered gains against 668 losers on the BSE.
The trading volume, however, was low but improved to Rs 3,747.69 crore from yesterday’s turnover of Rs 2,955.08 crore. RIL continued to be the top traded scrip with the highest turnover of Rs 404.62 crore followed by SBI (203.62 crore).
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