Indian shares rallied on Wednesday, with strong global cues on hopes for policy action from major central banks underpinning sentiment.
Investors started factoring in rate cuts by the Reserve Bank of India at its upcoming monetary policy meeting on June 18, as crude prices have fallen sharply in the past two months. It is believed that easing domestic growth, expectations of a normal monsoon this year and an uncertain global environment also leave some elbow room to cut key policy rates.
Investors also cheered positive global cues ahead of a European Central Bank policy meeting later in the global day.
The benchmark 30-share BSE Sensex rose to as high as 16,494 in the afternoon before finishing a tad lower at 16,454, up 434 points or a whopping 2.71 percent from its previous close. The 50-share Nifty index climbed 134 points or 2.75 percent to 4,997, while the BSE mid-cap and small-cap indexes jumped 1.8 percent and 1.5 percent, respectively.
Tata Motors climbed 5.7 percent, leading the gainers in the Sensex pack, as bargain hunters stepped in following recent steep losses. Hero MotoCorp soared 4.3 percent, a day after it unveiled plans to invest Rs 2,575 crore in setting up two new plants in Rajasthan and Gujarat and a R&D centre. Bajaj Auto and Mahindra & Mahindra rallied over 3 percent each, while Maruti Suzuki ended 2.8 percent higher.
Engineering & construction giant Larsen & Toubro jumped 4.8 percent on saying that it has emerged as the successful project bidder to develop two contiguous road projects worth about Rs. 4,800 crore. Other major infrastructure stocks also posted strong gains ahead of a ministerial meeting today to review the progress of infrastructure projects.
Metal stocks like Tata Steel, Hindalco, Sterlite and Jindal Steel rose 3-5 percent, as copper and other industrial metal prices advanced, in tandem with rising equities and a stronger euro. Lenders such as HDFC Bank and SBI rallied about 4 percent each and property developer DLF rose 2.8 percent on hopes that the RBI may cut interest rates to revive faltering economic growth.
Telecom major Bharti Airtel advanced 3.4 percent after the empowered group of ministers deferred a decision on fixing the reserve price for auctioning 2G spectrum, despite a long deliberation. FMCG player Hindustan Unilever added 3 percent on hopes of a good monsoon this year after the much-awaited South-West Monsoon hit the southern Kerala coast on Tuesday.
KEC International, Alstom T&D India and Ashok Leyland rose 2-3 percent on winning new work orders. Essar Oil soared 7 percent on equity dilution reports.
Elder Pharma rose 2.1 percent after launching 'Zalain', an anti-fungal drug in India in association with Spanish drug firm Ferrer. Textile firm Arvind rallied 3.9 percent, shrugging off news of an employee strike at its Naroda Road plant in Gujarat
Future Capital Holdings eased marginally on profit taking following the previous session's rally. Dr. Reddy's Laboratories slipped 0.3 percent as it inked a research pact with Germany's Merck KGaA to develop biotechnology drugs.
Elsewhere, only China's Shanghai Composite index bucked the regional uptrend to end 0.1 percent lower after reports said the government will continue to implement restrictions on home purchases "without wavering."
Hong Kong's Hang Seng index rose 1.4 percent, Japan's Nikkei average gained 1.8 percent and Indonesia's Jakarta Composite index rallied 3.3 percent on hopes of policy stimulus from the Fed. Australia's All Ordinaries index posted a modest 0.3 percent gain, as stronger than expected GDP figures lowered the chance of RBA cutting interest rates again in July and August.
The major European averages such as France's CAC 40 and the German DAX were last trading up about 2 percent each, as optimism ahead of a key ECB rate-setting meeting outweighed disappointing German industrial output data.
With an emergency conference call of G7 officials failing to produce concrete measures or joint action to alleviate concerns over European sovereign debt problems, investors are pinning hopes on the ECB meeting and Fed Chairman Ben Bernanke's congressional testimony tomorrow for near-term directional cues.
by RTT Staff Writer
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