Expectations of strong results from top notch companies, the decision to defer implementation of the controversial General Anti-Avoidance Rules by till 2016, heavy buying by FIIs in recent sessions and data showing a drop in wholesale price inflation lifted sentiment and pushed up stock prices to higher levels on Monday.
A firm trend in Asian markets set up a positive start for the market. Information technology stocks were among the early gainers. Soon, stocks from several other sectors joined the rally and the market never really looked in danger of losing ground today, as traders indulged in some short-covering at a few blue chip counters.
The BSE benchmark Sensex, which spurted to 19,948.63, ended with a strong gain of 242.77 points or 1.23%. The Nifty index of the National Stock Exchange closed at 6024.05, slightly off the day's high of 6036.90, recording a gain of 72.75 points or 1.22%.
The drop in inflation raised expectations of a rate cut from the central bank later this month, and triggered some hectic buying in realty stocks in afternoon trade. The BSE Realty index shot up by over 5%. Information technology stocks, led by bellwether Infosys, had another good outing.
Consumer durables, oil, PSU, metal and capital goods stocks were among the other notable gainers. Stocks from FMCG, power and banking sectors too closed on a firm note, while healthcare and automobile stocks were mostly subdued.
ONGC spurted 4.3% on hectic buying in late afternoon trade. Infosys, which ended on with a big gain on Friday thanks to better than expected results and earnings forecast, extended its gains and closed stronger by about 3.5%. Tata Consultancy Services moved up by 2.2%.
Jindal Steel & Power gained 3.4%. GAIL India, HDFC, ICICI Bank, ITC, Tata Steel, Larsen & Toubro, Bharti Airtel, NTPC and Hindustan Unilever moved up by 1.2% - 1.8%.
BHEL, Sterlite Industries, Reliance Industries, Hindalco, Dr Reddy's Laboratories and Hero Motocorp closed with modest gains.
DLF, up 7.85, was the top gainer in the Nifty index. HCL Technologies moved up 4.8%. Jaiprakash Associates, Punjab National Bank, Ambuja Cements, Reliance Infrastructure, Asian Paints, Axis Bank, IDFC, Sesa Goa, Siemens and BPCL gained 1% - 3.5%.
Lupin, Bajaj Auto, Maruti Suzuki, Tata Motors, Cairn India, Cipla, Sun Pharmaceutical Industries, Ranbaxy Laboratories, Power Grid Corporation and Ultratech Cement ended with sharp to moderate losses.
Jaiprakash Power Ventures declined on weak results. Petronet LNG and Muthoot Finance moved up on impressive quarterly numbers.
According to the data released by the government, the annual rate of inflation based on the monthly wholesale price index declined to 7.18% in December 2012 from 7.24% in November 2012. Build up inflation in the financial year so far was 4.72% compared to a build up of 5.22% in the corresponding period of the previous year, the Ministry of Commerce & Industry said in its statement today. The government revised downward WPI inflation for October 2012 to 7.32% from 7.45% reported on 14 November 2012.
Inflation based on the combined consumer price index for urban and rural India edged up to 10.56% in December 2012 from 9.9% in November 2012, data released by the Central Statistics Office showed. Within the consumer price index, inflation with respect to food and beverages stood at 13.04% in December 2012.