Hectic buying in interest rate sensitive bank, realty and automobile sectors almost right through the day, following the central bank's decision to cut CRR by 25 basis points, guided the market to its ninth successive close in positive territory on Monday.
The government's decision to open up FDI in retail, aviation and broadcasting industries raised hopes that more reforms will follow soon and contributed to improved sentiment on the bourses.
The market did retreat after a buoyant start, as the central bank left repo rates unchanged, but recovered swiftly to stay on in positive territory till the end of the day. The 25-basis points cut in CRR is expected to infuse around Rs 17,000 crore into the banking system.
While the BSE benchmark Sensex, which rose to 18,715.03 in early trades, ended the day with a gain of 78.04 points or 0.42% at 18,542.31, the broader 50-stock Nifty index of the National Stock Exchange closed at 5610, recording a gain of 32.35 points or 0.58%. The Nifty touched a high of 5652.20 and a low of 5585.15 during the day. Both Sensex and Nifty hit their highest levels since end July 2011.
Among bank stocks, State Bank of India and ICICI Bank moved up by nearly 5.5%. Axis Bank, Bank of Baroda, Bank of India, Federal Bank, Canara Bank, IDBI Bank, IndusInd Bank, Punjab National Bank, Union Bank of India and Yes Bank gained 3.5% - 8%, while HDFC Bank and Kotak Bank closed on a negative note. Several PSU stocks, which are not part of the Bankex, too closed with handsome gains.
Automobile stocks Hero Motocorp (3.1%), Tata Motors (2.8%), Maruti Suzuki (1.7%), Mahindra & Mahindra (1.8%) and Ashok Leyland (5.3%) moved up smartly. Bajaj Auto, however, ended lower, recording a loss of around 0.3%.
In the Realty index, DLF spurted 6.5%, HDIL vaulted nearly 14%, Phoenix Mills ended stronger by about 9.6%, Indiabulls Real Estate notched up a gain of 8.7% and Unitch moved up by 7.3%. Anant Raj Industries gained nearly 6%. Oberoi Realty, Sobha Developers, Prestige Estates and DB Realty also moved up sharply.
Capital goods stocks, led by sector majors Larsen & Toubro (4.4%) and BHEL (4.3%) posted strong gains. BEML spurted more than 12%. ABB, Bharat Electronics, Crompton Greaves, Havells India, Jindal Saw, Praj Industries, Punj Lloyd, Siemens, Suzlon Energy and Thermax all closed with impressive gains.
Reliance Industries (up nearly 4%) moved up sharply. Cairn India and GAIL India were the other strong gainers in the Oil & Gas index.
Jindal Steel, up nearly 6%, was the top gainer in the Sensex. Sterlite Industries, Bharti Airtel, Tata Steel, Tata Power and HDFC also closed on a high note.
Reliance Infrastructure, up 8.4%, topped the gainers list in the Nifty index. IDFC gained nearly 7%. Jaiprakash Associates moved up by a little over 6%. Sesa Goa, SAIL and Siemens also rose sharply.
ITC lost over 5.5% and Hindustan Unilever ended lower by nearly 3%. IT majors Tata Consultancy Services (down 5.3%), Infosys (down 2.7%), HCL Technologies (down 2.7%) and Wipro (down 1.8%) declined sharply.
Dr Reddy's Laboratories lost around 4%. Ranbaxy Laboratories ended lower by almost 3%. BPCL, Ambuja Cements, Coal India, Power Grid Corporation, Hindalco and ACC also closed notably lower.
Aviation stocks SpiceJet, Jet Airways and Kingfisher Airlines rallied sharply following the government giving nod to foreign airlines making fresh investment up to 49% in scheduled and non-scheduled airliners in India.
Shares of organized retailers Pantaloon Retail, Shoppers' Stop, Store One Retail, Provogue India, Koutons Retail and Trent rose sharply following the government approving FDI of up to 51% in multi-brand retailing sector.
Several stocks from the media space were in demand thanks to the government liberalising FDI in the broadcasting industry.
The market breadth was positive. Out of 3007 stocks traded on BSE, 1628 stocks moved up. 1262 stocks declined and 117 stocks ended flat.