Sensex rises more than 400 points on global rally, tax reform-led short-covering

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex and Nifty rose 1.6 percent on Thursday to snap a five-session losing streak as blue-chips including ICICI Bank surged as a rally in global markets and the cabinet's nod to a nationwide sales tax bill led to unwinding of short positions.

Asian share markets rose on Thursday after the U.S. Federal Reserve indicated it would wait until at least two meetings before raising rates.

Investors were also encouraged after the Indian cabinet approved a constitutional amendment bill on Wednesday to rationalise state and central indirect taxes into a harmonised goods and services tax (GST).

The developments sparked a recovery in domestic shares that had been hit by concerns about financial contagion from the Russian currency's drop to record lows.

"Progress on GST is positive and recent correction is a good opportunity for investors to increase their India allocations," said G. Chokkalingam, founder of Equinomics, a research and fund advisory firm.

The Nifty rose 1.61 percent to 8,159.30, while the Sensex ended up 1.56 percent at 27,126.57, both marking their biggest daily gains since Oct. 31.

Gains were spread across-the board with all BSE sector indexes ending positive. The BSE Consumer Durables index gained the most, ending 5.3 percent higher, followed by the BSE Power index which rose 3.3 percent.

Blue-chips led the gainers. ICICI Bank rose 4 percent, while Larsen & Toubro ended up 2.6 percent.

Infosys rose 1.4 percent and HDFC Bank gained 1.3 percent.

Shares of logistics companies rose on hopes of lower taxes and fast movement of goods after the cabinet cleared the nationwide goods and services tax bill.

Gateway Distriparks gained 2.2 percent, Snowman Logistics ended up 7.6 percent, Gati rose 5.3 percent and Container Corp of India advanced 4.7 percent.

Shares of cigarette makers also rose on media reports that tobacco had been included in the GST ambit.

ITC rose 0.8 percent, Godfrey Phillips India gained 1.2 percent and VST Industries ended up 1.3 percent.

Real estate stocks gained on media reports the cabinet deferred approval on a real estate regulatory bill.

Unitech Ltd gained 3.3 percent, DLF rose 1.7 percent while Housing Development and Infrastructure surged 10.8 percent.

Among the decliners, Glenmark Pharmaceuticals fell 2.1 percent, adding to Wednesday's slump of 2.4 percent on concerns over the company's sales exposure to Russia and Latin America.

(Editing by Anupama Dwivedi)