Diesel hike, Fed move lifts Sensex 443 pts to new 14-mth high

Logging its best single-day gain this year, Sensex today vaulted 443 points to a 14-month high of 18,464.27 as investors cheered government's decision to hike diesel prices and US Federal Reserve approved a new economic stimulus plan to spur growth.

In all nearly 1,500 stocks rose on the BSE taking investor wealth up by Rs 1 lakh crore to Rs 63.63 lakh crore.

The 30-share Sensex opened 260 points higher tracking overnight gains in US market. Reports of a new 'Quantitative Easing' plan by Fed and hopes India will take more bold steps on economic reforms after hiking diesel price by Rs 5.63 per litre, set the day's trend.

The positive sentiment prevailed despite inflation rising by a higher-than-expected 7.55% in August, which may restrain RBI from cutting interest rates at its monetary policy review next week, said dealers.

As session progressed, stocks built on the momentum as 24 shares of the 30-share Sensex closed with gains, led by Jindal Steel and Hindalco which rose over 8% each.

RIL, SBI and ICICI Bank rose around 5% each helping Sensex gain 443.11 points, extending the current rally to eight straight days where it vaulted over 1,100 points.

Today's closing of 18,464.27 points is a 14-month high since Sensex closed at 18,518.22 on July 26, 2011.

The 50-share NSE index Nifty today rose by 142.30 points, or 2.62% to 5,577.65.

"Sensex rallied 2.5% in response to government's first major move to curb fiscal deficit by raising diesel price and announcement of economic stimulus by the Federal Reserve. Aviation, retail and cable TV services shares rallied on hopes of green signal to hike in FDI cap," said Sanjeev Zarbade, VP - Private Client Group Research, Kotak Securities.

Across 13 BSE sectoral indices, 11 indices rose with Realty, Metal and Bankex jumping 4-5%. Capital Goods, Auto, Oil&Gas and IT shares logged 2-3.5% gains.

Brokers said a firming trend in the Asian region and higher opening in Europe further fuelled the uptrend.

Benchmark indices in Japan, South Korea, Singapore, Taiwan China, Hong Kong and Indonesia were up by 0.64% to 2.92%. European stock markets also rallied. Key benchmark indices in France, Germany and UK rose between 1.51-2.01%.

Trading in US index futures also indicated that the Dow could gain 32 points at the opening bell today, traders said.

The Dow Jones Industrial Average ended up by 206.51 points, or 1.55%, and the Nasdaq Composite index gained 41.51 points or 1.33%.

Talking about Indian markets, Kishor P Ostwal, CMD, CNI Research said: "Indian government hiked diesel prices which is being seen as big act of breaking the perception of policy paralysis. Rate cut hopes, however, have diminished since inflation topped 7.5% and likely to rise further due to rise in diesel and LPG prices."

Major gainers from the Sensex pack were Jindal Steel (8.83 pc), Hindalco (8.00%), SBI (5.52%), RIL (5.35%), ICICI Bank (4.97%), L&T (4.87%), Sterlite (4.56%), Tata Motors (4.32%), Maruti Suzuki (4.28%) and Tata Steel (4.21%).

Others including Infosys (3.17%), M&M (2.93%), Tata Power (2.68%), HDFC (2.46%), HDFC Bank (2.38%), Hero MotoCorp (2.17%) and BHEL (1.92%) also rose.

Among losers, NTPC declined by 1.61%, followed by Dr Reddy (1.59%) and and ITC (0.59%).

Overall, 24 scrips from the Sensex counters ended with gains while others closed with losses.

Among sectoral indices, the BSE-Realty flared up by 4.78%, followed by BSE-Metal (4.25%), Bankex (4.15 pc), BSE-CG (3.48%), BSE-Auto (2.89%), BSE-Oil&Gas (2.88 pc) and BSE-IT (1.38%).

The total turnover was up at Rs 2,746.29 crore from Rs 1,938.40 crore yesterday.

Foreign Institutional Investors (FIIs) bought shares worth a net Rs 361.48 crore yesterday as per the provisional data from the stock exchange.