Banks push markets to record highs; Nifty breaches 6,800

Benchmark indices ended at record closing highs due to strength in banking stocks

The key benchmark indices ended at record closing highs, bolstered by strength on the banking counters. The Sensex gained 370 points or 1.6% at 22,714 points and the 50-share Nifty moved hit an intra-day high of 6,808 before closing 101 points higher at 6,796.

All the sectoral indices ended in the green, with IT (information technology) being the sole exception. The Bank Nifty jumped by a whopping 3.45% at 12,937 points.  Metal, auto, oil and gas index hits 52-week highs. The broader markets outperformed the benchmark indices, with the BSE midcap index strengthening by 1.6% at 7285 and small-cap index adding 2% at Rs 7427. 

 

Around 283 stocks hits 52-week high, and 60 stocks touched record highs. Reliance Industries, Tata Motors, Hindalco Industries, Cairn India and Bank of Baroda are among CNX Nifty stocks to hit 52-week highs.  Around 218 stocks from B group were frozen at upper circuit on the BSE. Ashok Buildcon, KEI Industries, GOL Offshore and Bafna Pharma also closed higher by 20%.

 

The strength witnessed across the Asian and European Streets would have triggered a rebound after a sluggish start to the day's proceedings. The European indices, including the CAC, DAX and FTSE, jumped more than a per cent each in mid-session trades. On the Asian front, all the indices ended in the green, with the exception of Nikkei index.

The Japanese stocks stumbled 2.1% to a three-week low after the Bank of Japan Governor Haruhiko Kuroda raised doubts over whether the central bank will ease its policy stance anytime in the near future, which in turn catapulted the yen higher. Overnight, the US stocks had snapped their three-day losing streak; the S&P 500 was up 0.38%, Nasdaq Composite was up 0.81% and Dow Jones Industrial ended up 0.06%.

In other economy-related developments, a news report by the International Monetary Fund (IMF) had said that India’s economy is on its way to faster growth. In its latest report, the IMF predicts that the Indian economy will expand 5.4% in 2014-15 and accelerate to a pace of 6.4% the following year.

 

On things to watch out for, the FOMC meeting minutes will be released on Wednesday evening. These are the meeting minutes of Yellen's first decision, in which a third taper of QE to $55 billion was announced and forward guidance was dropped. The markets will look for indications regarding the timing of a possible rate hike. 

 

Smart movers

Sun Pharma, Tata Motors and private banks contributed the most to the Sensex's jump. Sun Pharma soared 6.9% to Rs 627.80 to lead the gainers charts on the BSE. The company on Monday had announced that it will acquire Ranbaxy Laboratories in a $4 billion all-share transaction.  Moreover, the brokerage UBS raised the rating on these stocks to ‘Buy’ after the acquisition deal. Ranbaxy gained 4.9% at Rs 497 as a result.

 

Hindalco climbed sharply by 4% to Rs 142 on the BSE after Alcoa Inc reported quarterly earnings that beat analysts' expectations on April 8. Index heavyweight RIL gained 1.3% at Rs 961. A week after agreeing to temporarily supply gas to fertiliser companies, RIL has shot off a letter to them saying it is not bound by any agreement to supply gas from its KG-D6 at $4.2/mmbtu even in the interim.

 

Banks rally

In the banking space, Axis Bank gained 4.4% at Rs 1484, ICICI Bank gained 4.1% at Rs 1259 and SBI added 3.2% at Rs 1984.

And in the mid-cap banking space, Bank of Baroda, South Indian Bank, Indian Bank and Oriental Bank of Commerce rallied more than 5% each, while Federal Bank, IDBI Bank, Punjab National Bank, Canara Bank, Bank of India, Jammu and Kashmir Bank, Union Bank of India and Syndicate Bank are up nearly 4% each. Most analysts have upgraded the banking sector to Neutral from negative on signs of an economic turnaround.

 

Among other stocks, OnMobile Global surged 6.6% to Rs 36.35 on the BSE after the company executed a non-binding memorandum of understanding for the potential divestment of its group company, Voxmobili SA.

 

Gulf Oil Corporation surged 5.9% to Rs 122, extending its 6% rally in past two trading sessions after the company said its promoter, Gulf Oil International (Mauritius) Inc. has recently acquired additional shares to the extent of 4.99% for about Rs 53 crore through open market.

 

Suzlon climbed 7% to Rs 14.94 as Suzlon Group, which recently bought the Big Sky Wind Farm in Illinois from Edison Mission Energy, sold it to EverPower Wind Holdings.

 

The IT sector had a lacklustre trading session, with Infosys slipping by 1.1% at Rs 3253, TCS weakening by 0.7% to Rs 2134 and Wipro shedding 0.4% at Rs 553. 

The market breadth was over-whelmingly in favour of the bulls. Out of a total 2860 stocks traded on the BSE, there were 1873 advancing stocks as against 877 declines.