Benchmark indices ended nearly 2% higher snapping eight-day losing streak amid a broad-based rally led by index heavyweight, capital goods and bank shares while firm global cues and strength in Asian markets also aided the upmove.
The 30-share Sensex ended 517 points higher at 27,976 and the 50-share Nifty closed 120 points higher at 8,492.
"Markets took a U- turn today, on the back of strong buying in the frontline stocks. Short sellers were forced to cover their shorts helped the markets to a certain extent. Global markets were also in the green helped the sentiments to improve," said Alex Mathews, head research, Geojit BNP Paribas Financial Services in a note post market hours.
In the broader market, both the BSE Midcap index, up 1.9% and Smallcap index, up 3.4% performed better than the front-liners. Market breadth in BSE ended positive with 2,005 advances against 729 declines.
Analysts say that the upmove seen on Monday is likely to extend into April. However, one needs to be selective and have a stock specific approach ahead of the quarterly results season.
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G.Chokkalingam, founder and managing director, Equinomics Research & Advisory, says: "The markets have seen a healthy correction after the steep rise seen since the last year. Since the past few weeks, we have seen a sell-off on account of not only global factors, but also some profit booking by the investors ahead of the futures & options (F&O) expiry for the March series. Investors also sold off to take advantage of the tax benefits ahead of the financial year closing."
"With these two events – the F&O expiry and the tax benefits owing to financial year closure behind us, I feel some rise seen on Monday has been has been on account of these investors returning to the market. I expect the markets to resume their up move in April," he adds.
Credit rating agency Moody’s said in its latest Credit Outlook report released on Monday that the government’s latest plan to revive the stranded gas-based power generation capacity through imports will help save $16 billion worth of investments and banks including IDBI, State Bank of India (SBI) and ICICI are set to be the biggest beneficiaries of the plan.
Meanwhile, foreign portfolio investors (FPIs) sold shares worth a net Rs 320.52 crore on Friday, as per provisional data.
All the 12 sectoral indices of BSE ended in green. BSE Capital Goods index up over 2.8% was the top gainer followed by BSE FMCG and Realty indices up around 2.1% each. BSE Bankex gained 1.8% and BSE Auto, Power and Metal indices gained 1.5% each.
Select index heavyweight stocks led the gains in today’s session. FMCG major, ITC gained around 3% and HDFC was up 2.3%. According to media reports, HDFC is planning to raise around Rs 2,400 crore via public-offering of 10% of its stake.
Bank shares ended firm. ICICI Bank gained over 1%, HDFC Bank was up over 2%, Axis Bank gained over 3% and SBI was up 1.6%. According to media reports, ICICI Bank has repatriated $100 million of capital from its UK and Canada unit.
Capital Goods stocks surged with L&T gaining over 3% and BHEL gaining nearly 3%. The newly formed Telangana state utility, Telangana State Power Generation Corporation Limited (TSGENCO) has awarded BHEL with an EPC (Engineering, Procurement & Construction) order for setting up a 4x270 MW thermal power plant in the state.
The buildings and factories business of L&T Construction — an arm of the engineering and construction firm — fetched Rs 880 crore, while power transmission and distribution wing got Rs 676 crore orders, L&T said in a regulatory filing.
ONGC gained 3.75%. According to media reports, the state-owned company is planning massively expand exploration of natural gas and oil along with optimising the production from existing wells.
Bharti Airtel gained over 3%. Bharti Airtel has bought 61.2Mhz, 15.4Mhz and 35Mhz of spectrum across the 900, 1800 and 2100mhz bands respectively with a total payout of Rs 30.2bn. Analysts at Religare Institutional Research believe that high spectrum renewal charges would put a lot of strain on the balance sheet of telecom companies which they only be able to offset by a series of hikes in tariff charges.
NTPC gained over 1.5%. NTPC has issued bonus debentures worth over Rs 10,000 crore to its existing shareholders, including Rs 7,726 crore to the central government, for funding its expansion plans, media reports suggested.
Coal India gained around 3%. CIL has been appointed the custodian of the coal field that was won by Jindal Power but the allocation was cancelled later by Union Government.
According to media reports, five global and three local investment bankers have agreed to underwrite more than half the Tata Motors Rs 7,500-crore rights offer. Tata Motors will use the equity infusion of Rs 7,500 crore from the rights issue to reduce debts and for capital expenditure. The stock ended 0.8% higher.
Among other major gainers, IT shares ended higher. Infosys, TCS and Wipro gained 1.3%-2%. Tata Power and Hindalco, however, lost 0.8% and 1.5%, respectively.