Brokers said the sensex, which had declined yesterday ahead of the Reserve Bank of India's (RBI) annual monetary policy review, bounced back today after the central bank kept interest rates unchanged. Banking, auto and realty stocks surged. IT stocks moved up after the Finance Minister extended tax exemption for the IT sector by a year. Metal stocks also rose.
Overall, the market breadth was strong.
The central bank raised the cash reserve ratio (CRR) by 25 basis points and the stance of its monetary policy was hawkish. The market had witnessed a bout of volatility earlier in the day ahead of monetary policy announcement.
Finance Minister P Chidambaram today said government will impose export tax on basmati rice and some steel products, and cut import duties on key inputs like ferro alloys and metallurgical coke. He said the measures were being taken to improve domestic supplies and to moderate prices.
The two-day US Federal Reserve policy meeting ends on April 30.
The market expects the Fed to cut interest rates by 25 basis points by o 2 per cent and then signal that its rate-cutting cycle may be over for now in the face of mounting global energy and food inflation pressure.
US stocks ended flat yesterday, as a USD 23 billion takeover of Wm Wrigley Jr Co, the world's largest chewing gum maker, by Mars Inc, the maker of M&Ms candy, helped offset downbeat comments by influential investor Warren Buffett about the economy. Buffett said US could be mired in a longer and deeper recession than most people think.
Asian stocks were mixed today. Key benchmark indices in Hong Kong and China were up by between 1.05 per cent (pc) to 1.4 pc. Key benchmark indices in Singapore, Taiwan and South Korea were down by between 0.64 pc to 2.07 pc. Japanese markets were closed for a national holiday.
European markets were mixed. France's CAC 40 and Germany's DAX and were down between 0.35 per cent--0.56 percent, while UK's FTSE 100 rose 0.4 pc.
The sensex hit a high of 17,424.94 in late trade. At the day's high, Sensex rose 408.98 points. It hit a low of 17011.60 in mid-morning trade. At day's low Sensex fell 4.36 points. The turnover on BSE stood at Rs 7262 crore as compared to a turnover of Rs 5544.33 crore yesterday.
The broader based S&P CNX Nifty index of NSE was up 105.85 points or 2.08 pc at 5,195.50 at the end of the session from its last close of 5089.65 points. It opened high at 5092.40, later it recorded the day's high at 5210.90 and a low at 5082.15 points during the session.
The CRR is the percentage of banks' deposits which they must keep as cash with the central bank. It may be recalled that RBI had earlier this month announced a two-stage rise in CRR to 8 per cent.
The RBI said managing liquidity would continue to receive priority in its policy objectives and warned it would act swiftly to curb any signs of adverse developments on inflation expectations.
The market breadth was strong on BSE with 1600 shares advancing as compared to 1101 that declined. 64 remained unchanged.
All BSE indices including BANKEX were in limelight on fresh speculative demand.
BSE METAL index shot up by 568.75 points and closed firm at 16,192.97 points, followed by REALTY index by 482.17 to 8650.24, OILS&GAS index by 231.24 points to 11,661.26, CG index by 176.13 points to 13,931.17 points, BANKEX index by 147.91 to 8964.75, PSU index by 130.21 to 8008.99, MID CAP by 79.55 to 7146.95 points,SML CAP index by 75.49 points to 8785.31, AUTO index by 69.42 to 4646.62 points, TECK index by 69.21 to 3459.11 and POWER index by 31.75 points to close at 3336.34 points, brokers added.
Realty stocks surged in late trade. Indiabulls Real Estate was up by 3.6 per cent to Rs 560.25 followed by DLF by 9.04 pc to Rs 729 and Unitech by 9.05 pc to Rs 320.05. IT stocks surged. Satyam Computer Services was up by 8.22 pc to Rs 479.35 followed by Infosys by 5.15 pc to Rs 1,750.75, Wipro by 4.7 pc to Rs 479.20 and Tata Consultancy Services by 3.15 pc to Rs 910.80.
Tata Steel gained by 4.01 pc to Rs 808.90, followed by National Aluminium Company by 4.37 pc to Rs 458.70, Hindalco Industries by 6.44 pc to Rs 198.20, Steel Authority of India by 2.08 pc to Rs 179.40, Sterlite Industries by 4.77 pc to Rs 898.85.
Banking stocks surged after the RBI's policy announcement. State Bank of India was up by 3.27 pc to Rs 1,793.50, HDFC Bank rose by 1.95 pc to Rs 1,547.50 and ICICI Bank gained by 0.71 pc to Rs 901.30.
Auto Stocks edged higher as Mahindra&Mahindra was up by 1.17 pc to Rs 642.70, Tata Motors gained by 1 pc to Rs 639.95, Maruti Suzuki India moved up by 1.24 pc to Rs 731.30 and Hero Honda Motors was up by 5.34 pc to Rs 861.85.
HDFC rose by 5.95 pc to Rs 2881.45 followed by Larsen&Toubro by 2.09 pc to Rs 3007.40, Jaiprakash Associates by 5.95 pc to Rs 266.10, Ambuja Cements by 1.32 pc to Rs 114.85, Bharat Heavy Electricals by 1.29 pc to Rs 1891.85 and Reliance Industries by 2.35 pc to Rs 2,653.
Hindustan Unilever rose by 1.48 pc to Rs 250.85 on good performance results.
But a few scrips drifted lower on profit booking with Reliance Communications declining by 1.73 pc to Rs 574.70 while Bharti Airtel fell by 2.67 pc to Rs 904.50. Reliance Communications said yesterday it would offer unlimited national long distance calls within its network for a fixed rental with immediate effect. sector leader Bharti Airtel also slashed long distance and roaming tariffs by 43 pc effective April 30.
Aban Offshore declined by 2.43 pc to Rs 3,495. The company's net profit rose 16.97 per cent to Rs 34.54 crore on 40.2 per cent rise in total income to Rs 215.3 crore in Q4 March 2008 over Q4 March 2007.
RBI felt there were some demand-side pressures. Domestic iron and steel prices saw a sharp increase in line with recent hardening in international steel prices, it said, while cement price rise could be attributed largely to strong demand from construction domestically.
A survey of professional forecasters by the central bank showed that the Indian economy is expected to grow 8.1 per cent in the 2008/09 fiscal year. In 2007/08, the gross domestic product is estimated to have grown 8.7 per cent.