Sensex up over 500 points; Banks, Real estate lead

The decision by US Federal Reserve to continue with its $85 billion-a-month bond-buying program for at least another month sent market on stellar highs on Thursday. Both benchmark indices clocked record highs, the BSE Sensex hit its highest level since January 2011 while NSE Nifty too hit its highest level in more than 8 weeks.

At 11:25 AM, the 30-share Sensex rose 522 points at 20,484 and the 50-share Nifty added 168 points and is currently trading at 6068 levels. Broader indices too clocked gains, the BSE Mid-cap jumped 1.5 per cent while BSE small-cap index added almost 1 per cent.

Nearly all sectors barring IT are trading higher on the BSE led by banks, Real estate and metals. Shares of rate sensitive sectors such as automobiles, real estate, infrastructure and banking have rallied up to 17% on hopes that the Reserve Bank of India (RBI) may roll back its tightening measures taken in order to contain the forex volatility in its monetary policy review on tomorrow.

Ravi Nathani, Technical Analyst, nsetoday.com, still believes that this is sell on rally market. He said, "We are very close to its resistance level(Nifty faces strong resistance at around 6095) and from the current levels one might expected a correction as markets have rallied sharpy and is trading at overbought zone,"

Markets worldwide were expecting Fed to begin tapering its QE-3 by $10-$15 billion beginning September. But US Fed Chairman Ben Bernake's decision took markets by a positive surprise. U.S. stocks rallied to record highs on Wednesday after the news, the Dow Jones industrial average (DJI) rose 147.21 points or 0.95 percent, to 15,676.94, the S&P 500 .SPX gained 20.76 points or 1.22 percent, to 1,725.52 and the Nasdaq Composite .IXIC added 37.942 points or 1.01 percent, to 3,783.641.

The S&P's previous closing high was 1,709.67 and the Dow's was 15,658.36, both on August 2.

Asian shares and currencies too surged across the board on Thursday, from Jakarta to Manila, Tokyo to Sydney investors celebrated the prospect of prolonged stimulus in the world's largest economy. MSCI's broadest index of Asia-Pacific shares outside Japan jumped 2.2 percent to a four-month peak.

Indonesia's main stock index climbed 4.5 percent, the Philippines 3.1 percent, Australia 1 percent and Japan's Nikkei 1.6 percent.

Emerging markets cheered in unison the Fed's decision to put taper on the backburner, the MSCI Emerging Market exchange-trade fund jumped to its highest level since May 21. Brazilian Bovespa was up 2.64% while Mexico's IPC was up 1.86%.

The next trigger investors back home are waiting is the Reserve Bank of India’s monetary policy review tomorrow-- the policy under the new governor, Raghuram Rajan-- will be very crucial.

Market will now see whether the central bank withdraws the liquidity-tightening measures announced mid-July. According to markets participants, it will be difficult for Rajan to cut interest rate, as headline inflation inched up in August.

The market breadth was positive. Out of 2025 stocks traded, 1160 stocks advanced while 741 stocks declined on the BSE.

Rupee strengthened significantly in today’s trade tracking other emerging market currencies after US Federal Reserve continued with its bond-buying plan.

At 10AM, the partially convertible rupee was trading at 61.82 per dollar against the yesterday’s close of 63.38 on the Interbank Foreign Exchange.

Gold on MCX is trading up by 1% on the back of strong gains in gains internationally, but strength in the rupee has capped the price rise of gold.

Yesterday Fed announcement has been in support of bullion prices internationally, gold internationally yesterday after Fed's announcement rose to $1364.5 per ounce up by 4.2%.

STOCK MOVERS

The key notable movers included counters such as Bharti Airtel that has rallied over 5% at Rs 355 on reports that Singapore Telecommunications Ltd (SingTel), the largest foreign investor in the company pledges support to lead a consolidation drive of the local telecoms industry.

Banking shares are on a roll in opening deals surging up to 17% on NSE as Indian rupee appreciated nearly two percentage points against US dollar after the Federal Reserve decided to continue liquidity infusion through asset purchases.