Markets rally 2%, bankex firm
Markets rallied 2% tracking gains across Asia and Europe as investors remained hopeful of the progress in the European Union to contain the debt crisis and buying in banking shares back home also helped. The Sensex closed at 17,085, up 337 points and the Nifty ended at 5,139 up 102 points
Earlier in the day, the markets opened on a positive note and touched a high of 17,101 in the second of half of the trade. Firm European bourses and gains in banking and realty shares locally also buoyed the markets.
Asian shares rose on Wednesday, but gains were capped by a cut on Spain's sovereign credit rating by Moody's Investors Service that kept investors' risk appetite in check. The Japan’s Nikkei stock average ended up 0.4%, the Hang Seng added 1.3% and the Shanghai Composite Index closed flat.
In Europe, stocks marched higher; the FTSE, CAC and DAX surged 1% each on reports that France and Germany reached a deal to enlarge the Euro-zone bailout fund to $2.5 trillion. Also Bank of England voted in favour of an additional 75 billion pounds of stimulus to propel the Britain’s ailing economy.
Back in India, all the components on the Sensex ended in the green. Major contributors to the Sensex were Reliance Industries, ICICI Bank and Larsen & Tourbo, up 2-4% each. The heavyweights contributed 120 points to the Sensex.
Going forward, markets will continue to face resistance at higher levels. Milan Bavishi, Head of Research at Inventure Growth and Securities said, “If markets rise from here, we would again face selling pressure at higher levels, unless Nifty is able to close above 5,200 mark. If Nifty is able to cross 5,200, the next level of resistance comes at 5,325. On the downside, supports lie at 4,960.”
Among individual stocks, HDFC Bank surged 3%, at Rs 491 after it reported 31.5% rise in net profit in the second quarter on back of strong demand for loans.
ONGC surged 2% after the news that the follow-on public offer is likely to take place next month. There are concerns that ONGC’s Rs 11,000 crore issue will suck liquidity from the secondary markets.
Hero MotoCorp zoomed 4% after Ravi Sud, CFO said that it does not expect high fuel prices, interest rates and inflation to affect demand for motorcycles in FY12. The company reported 19% jump in the net profit in the second quarter, at Rs 604 crore from higher vehicle sales.
Among the new listing, Taksheel Solutions, an Information Technology firm tanked 73%, to Rs 40 after listed at Rs 158% premium against its issue price of Rs 150 per share on the National Stock Exchange. The stock hit a high of Rs 161.90 and low of Rs 150 in intraday trades.
Investors cashed into banking shares after HDFC Bank reported upbeat results; Axis Bank, State Bank of India and ICICI Bank advanced almost 3% each.
The realty index also ended on a firm ground, up 3%; Parsvnath Developers surged 9%, Anant Raj Industries advanced 8% and DLF was up over 4%.
From the broader markets, midcap and the smallcap indices surged 1% and 0.7% each.
Market breadth was positive, 1,670 stocks advanced, for 1,136 stocks which declined on the BSE.