Indices rise but gains capped on selling in consumer, IT stocks

The BSE Sensex finished the session at 20,247, up 0.2% from its previous close. The NSE's Nifty ended at 6,169, up 0.4% from its previous close

The benchmark indices rose to 30-month highs today but ended almost unchanged over the previous day, even as shares of banks and property developers extended gains on hopes of a steeper rate cut when the central bank's rate-setting committee meets next month.

Selling in consumer goods and information technology stocks capped upsides in the indices.

The BSE Sensex finished the session at 20,247, up 0.2 per cent from its previous close. The National Stock Exchange's Nifty ended at 6,169, up 0.4 per cent from its previous close.

Market analysts said the rally in the banking stocks was predictable, with inflation numbers improving and hopes of further rate cuts by RBI. The surprise was the rally in the stocks of the public sector banks, they added.

"This indicates investors are now looking purely at valuations. Some of these stocks are not cheap any more, so investors are looking at those with cheaper valuations. This would help reduce the valuation gap between under-performing and out-performing stocks," said Gaurav Dua, head of research, Sharekhan.

Some of the major gainers were stocks belonging to the real estate sector, such as HDIL, IRB and Indiabulls Real Estate. "These stocks are just playing into the momentum. There has been no fundamental improvement in this sector. Trading volumes in these stocks are higher than delivery-based volumes," said Sadanand Shetty, vice-president and senior fund manager, equity, Taurus Mutual Fund.

Other stocks which rallied include those which have been added to the MSCI India index. Apollo Hopsitals, GlaxoSmithKline Consumer, Oil India and Wockhardt have been added. Apollo was the highest gainer on the BSE, up 8.5 per cent from its previous close. GlaxoSmithKline was up 7.6 per cent, Oil India was up 3.1 per cent and Wockhardt gained about one per cent.

Foreign institutional investors were net buyers and bought shares worth Rs 1,070 crore. Domestic institutional investors continued selling in the net, at Rs 390 crore.