Sensex jumps to 1-month high as FM talk fuels rate cut hopes

After resuming higher in early trade, the BSE benchmark index kept on accumulating gains throughout the session as investors bought shares in auto, realty and banking sectors.

Sensex hit an intra-day day high of 17,641.55, its highest in 4 months, before closing at 17,601.78 -- 188.82 points or 1.08 per cent higher over yesterday's closing. This is the highest closing since July 10 when it had closed at 17,618.35.

Smart rise in stocks including ICICI Bank, Tata Motors, TCS, HDFC, SBI, L&T and Bajaj Auto helped Sensex log over one per cent gains for the second day in a row.

Brokers said IT stocks, including Infosys, rose after US-listed Cognizant stood by its full-year revenue forecast while interest-rate sensitive stocks rose after the new FM indicated a possible rate cut.

"Sometimes it is necessary to take carefully calibrated risks in order to stimulate investment and to ease the burden on consumers. We will take appropriate steps in this regard," Chidambaram said yesterday.

Speculation is on in the market for possible rate cut, said Nidhi Sarswat, Sr Research Analyst, Bonanza Portfolio.

All sectoral indices closed higher, barring Oil& Gas and Consumer Durables. Investor wealth swelled by over Rs 40,000 crore to Rs 61.75 lakh crore today as over 1,500 stocks rose.

The broader NSE 50-isse Nifty also flared up further by 54.15 points or 1.03 per cent to end at 5,336.70.

"The FM's statements regarding plans to reduce fiscal deficit and address tax concerns of overseas investors also drove the upsurge," said Sanjeev Zarbade, Vice President PCG Research, Kotak Securities. (MORE)