Sensex spurts 337 points to close at one-month high

The return of risk appetite in the equity markets saw the BSE Sensex close at a one-month high on Wednesday. Firm global markets and positive quarterly results by Hero MotoCorp proved sentiment boosters. The Sensex gained two per cent or 337 points, to close at 17,085. The broader Nifty of the National Stock Exchange rose two per cent or, 101 points, to 5,139.

Hero MotoCorp, the country’s top motorcycle maker, rose 4.13 per cent to close at Rs 2,066, as it beat analyst estimates with a 19 per cent rise in quarterly profit. The company said it was confident of boosting sales. Credit Suisse and Bank of America have forecast that Hero’s margin will expand further due to softening of commodity prices and an increase in production.

In Europe, Germany’s DAX rose 0.92 per cent. UK’s FTSE rose 0.88 per cent and CAC 40 of France was up 0.72 per cent. Heng Seng index rose 1.29 per cent to become the second-highest gainer after Indian markets. However, China’s Shanghai Composite fell 0.25 per cent and Taiwan Weighted was down 0.08 per cent.

Globally, there was optimism on reports that France and Germany had reached an agreement to increase the euro zone’s bailout fund to Euro 2 trillion, as part of a plan to ease the debt crisis and calm market uncertainties. However, rating agency Moody’s cut Spain’s rating for the third time since June. The latter was downgraded to A1 from Aa2, with a negative outlook. Standard & Poor’s had also downgraded Spain on October 14.

“Apart from corporate results, investors will also keep an eye on US inflation, housing data and Fed’s beige book survey to be announced later on Wednesday. In the US, earnings of Morgan Stanley and United Technologies Corp are being watched,” said Amar Ambani, head research (India Private Clients), IIFL.

“The coming days are crucial due to the October derivative expiry and the Reserve Bank of India’s half yearly review meeting,” said Alex Mathews, research head, Geojit BNP Paribas Financial Services.

The breadth of the market remained strong, with 1,637 shares rising and 1,146 declining. A total of 122 shares remained unchanged. Provisional figures show that foreign institutional investors were net sellers of equity worth Rs 14.45 crore. Domestic institutional investors, too, sold stocks worth Rs 94 crore.

The heaviest two scrips on the Sensex, with 20 per cent weight, Reliance Industries and Infosys rose sharply. While the former rose 2.72 per cent, the latter gained 0.89 per cent. Among banking stocks, HDFC Bank was up three per cent, after posting a 31.5 per cent rise in quarterly profit. State Bank of India rose 2.78 per cent and ICICI Bank gained 3.15 per cent.

Deutsche Bank said banking stocks were trading at trough valuations and named State Bank of India and HDFC Bank as top sectoral picks.

Tata Motors, the country’s largest truck maker, rose 3.14 per cent on hopes that sales would continue improving. Last week, the company had reported a 24 per cent rise in global September sales.