Sensex closes 95 pts up on BSP support to FDI in retail

Barring tech stocks, all other groups of stocks closed higher on the Bombay Stock Exchange

A bout of short covering during the last hour of trade on Thursday saw domestic equity markets recover sharply from the day’s lows. The BSE benchmark index, Sensex, recovered 300 points from the day’s low after Bahujan Samaj Party (BSP) chief Mayawati said she would support the Union government during a vote on foreign direct investment (FDI) in multi-brand retail in the Rajya Sabha. This was the third straight day of gains for the market.

The Sensex closed with gains of 95 points, or 0.5 per cent, at 19,487. The broader index S&P CNX Nifty of the National Stock Exchange (NSE) gained 30 points to close at 5,931. The rupee hit a one-month high of 54.08.

The BSP, which had abstained from voting in the Lok Sabha yesterday, will vote in favour of the government in the Rajya Sabha. The Congress-led United Progressive Alliance government had won Wednesday’s vote in the Lok Sabha on retail FDI, but it was believed that a win in the Rajya Sabha would be difficult, as the government is in minority in the upper house of Parliament.

“Mayawati’s decision to go with the government has been a game changer for stock markets. It was widely believed that there would be mid-term polls next year if the government loses the vote on FDI. However, stock market players do not see early elections and this may change sentiments," said Harish Vasudeven, an independent equity analyst.

The rise in share prices was led by a rebound in rate-sensitive stocks such as ICICI Bank. This was on hopes that parliament might clear the pending pension and insurance Bills. ICICI Bank rose 1.4 per cent to Rs 1,135. Tata Motors Ltd rose 1.93 per cent to Rs 280, while Sterlite Industries Ltd saw a 2.35 per cent rise to Rs 115.

Retail stocks also closed with strong gains. Among the big retailers, Shoppers Stop and Pantaloon Retail closed 0.5-1 per cent higher. Both stocks hit their 52-week highs yesterday. Smaller stocks such as Provogue (India) Ltd and Cantabil Retail India Ltd surged five-seven per cent.

Barring tech stocks, all other groups of stocks closed higher on BSE. Tech stocks closed lower for a third straight day over concerns of muted growth in 2013. New Jersey-based Cognizant Technology Solutions Ltd’s filing with the US market regulator showed a dip in expected revenue growth.

Provisional figures showed that foreign institutional investors purchased stocks worth Rs 838 crore and domestic institutional investors were net sellers of Rs 662 crore.