Markets end at highest level since Jan 2011

Bank Nifty closes at a 30-month high; Rate sensitives lead the rally on RBI rate cut optimism

Benchmark indices rallied to a 28-month high and the Bank Nifty shot up to a 30- month high in today's trade after RBI governor said that he has noted the fall in inflation, fuelling hopes for a further rate cut in the upcoming Policy. At the close, the Sensex was up 491 points or 2.5% at 20,213 and the Nifty gained 151 points or 2.5% at 6,147.

In the broader markets, the midcap index gained 1.6% and the smallcap index added nearly 1%, both underperforming the Sensex which was up 2.5%

The RBI’s shift in stance came in after the Wholesale Price Index (WPI) inflation for April 2013 moderated for the third straight month to 4.89%, below the comfort zone of the RBI, bolstering hopes of an interest rate cut by the central bank.  RBI’s comfort level for inflation is between 4% and 5%.

Meanwhile in global markets, Europe was trading largely in the green with CAC and DAX up 0.2% while FTSE was flat with a negative bias.

In Asia, Japan's Nikkei average rose 2.3%, breaking above 15,000 for the first time since January 2008. The other major gainers were Shanghai Composite, Hang Seng and Taiwan Weighted gaining 0.3-0.8%.

Back home, all the sectoral indices registered over 1% gain except the IT index, which was up 0.4%.

Rate sensitive like Realty, Bankex and Auto indices surged 2-4% along with Capital Goods, PSU, Oil & Gas, Health Care, Metal, Power, FMCG and Consumer Durables indices which moved up 1.5-3%.

Wipro down 0.5% was the only stock to close in the red, among Sensex-30.

The major movers among the Sensex stocks were from the financial space with HDFC, SBI, ICICI Bank and HDFC Bank adding nearly 4-5%.

All the major auto names - Mahindra & Mahindra, Tata Motors, Bajaj Auto, Maruti Suzuki and Hero MotoCorp- gained 2-3.6%.

Oil & Gas majors, Relaince Industries and ONGC closed up 2.6% each.

Metal stocks like Hindalco, Jindal Steel and Tata Steel added 1.5-2.7%.

L&T, Cipla, NTPC, ITC and Dr Reddys Lab, up 2-4% were the other notable gainers.

Among individual stocks, DLF was up 5% at Rs 242 after the company received strong response from institutional investors for its share sale programme.

Sun Pharma Advanced Research Company (SPARC) surged 13% to Rs 163, extending its previous day’s 15% rally, after reporting net profit of Rs 44 crore for the fourth quarter ended March 31, 2013 on back of healthy growth in operational income.

Vikas WSP gained 14% to Rs 33.05, on re-launching of futures trading of guar gum and seeds on commodity exchanges.

Eicher Motors hit a new high in intra-day trades. At the close, the stock was up 4.1% at  Rs 3,397, after the company has made an upward revision in its sales estimate for the current calendar year on back of strong demand for Royal Enfield products.

IVRCL surged 6% to Rs 20.45 after the company announced that its various divisions have bagged fresh orders amounting to Rs 639 crore.

Shares of IRB Infrastructure were up 6% at Rs 124 after the company announced robust fourth quarter earnings.

The market breadth was strong on the BSE. 1466 stocks advanced while 973 stocks declined.