Stimulus, low fuel price buzz boosts Sensex

The Sensex gained for the second day today to touch the highest in a week on optimism that any government measure to lower fuel prices and unveil a stimulus package will boost a slowing economy.

The Bombay Stock Exchange (BSE) benchmark index rose 182.64, or 1.9 per cent, to 9,716.16 at the close of trading. The S&P CNX Nifty Index of the National Stock Exchange (NSE) gained 57.30, or 2 per cent, to 2,979.50.

The Union government is likely to announce more fiscal measures in the next few days to stimulate the slowing economy. It may also take steps to cut prices of petrol and diesel.

“The government’s planned stimulus package for the economy is lifting the macro sentiment… There’s also an expected drop in fuel prices and a cut in Interest rates as inflation rate falls,’’ said A Balasubramaniam, who manages the equivalent of $8 billion as Chief Investment Officer of Birla Sun Life Asset Management in Mumbai.

ICICI Bank gained 3.1 per cent to 458.6, the highest in more than a week. Housing Development Finance Corporation rose 2.3 per cent to 1,532.65.

Larsen & Toubro, India’s biggest engineering company, gained 4 per cent, its biggest rise in more than two weeks, to 771.9.

Reliance Communications, the nation’s second-largest mobile-phone operator, rose Rs 15.3, or 7.2 per cent, to Rs 228.15, its biggest gain in three weeks. The company started offering nationwide wireless services based on the global system for mobile communications or GSM standard, six months earlier than planned.

Satyam Computer Services, the software company that said three directors quit yesterday as the company struggles to regain investor confidence after fumbling acquisition plans and drawing a sanction from the World Bank, gained 8.5 per cent to Rs 160.7, a one-week high.

The Sensex has fallen 52 per cent this year, set for its first decline in seven years, as the worst global financial crisis since the 1930s reduced liquidity and raised concern the Indian economy may slow.