Sensex jumps 337 points on global cues; blue chips rally

Last Updated: Fri, Sep 07, 2012 12:24 hrs

The BSE Sensex climbed 1.95 percent on Friday, its biggest single-day percentage gain since June 29, tracking strong global markets after the European Central Bank's commitment to bond-buying plan revived appetite for risk.

Gains in blue chips led by Reliance Industries Ltd , which rose after CLSA said it is "time to cut under-weight" on the stock, also helped the indexes.

Indian stock markets are keenly watching if the government can push forward foreign direct investment and fuel price hike via executive decisions as the monsoon session of the deadlocked parliament ends on Friday.

Investors' anxiety is seen rising, as prolonged wait for much touted reform measures is expected to gather further pace next week, ahead of the Reserve Bank of India's policy meeting on September 17.

"Today's jump is just ECB effect but any falls in the next couple of days would be buying opportunity, as I think Chidambaram would achieve reforms on fuel price hike, GAAR and retro tax in September," said Deven Choksey, MD, K R Choksey Securities.

"Reforms have to come ahead of RBI meet otherwise the bank will not ease. RBI has very clearly communicated that government has to do its part on reforms before it eases," Choksey added.

The BSE index rose 1.95 percent to end at 17,683.73 points, marking its second day of gains.

The 50-share NSE index ended up 1.98 percent at 5,342.10 points, closing above its psychologically important 50 day-moving average of 5271.41 points.

Markets also await key macroeconomic data next week. July industrial output data to be released on September 12 and August headline inflation on September 14.

Data points will also be key ahead of RBI's monetary policy review on September 17.

Markets expect July IIP growth of around 0.3 percent while August inflation is seen around 7 percent.

Indian stock trading in both Bombay Stock Exchange and National Stock Exchange will be opened for 1-1/2 hours on Saturday, September 8 as the BSE is testing its disaster recovery software.

Trading will start at 11:15 a.m. India Time and end at 12:45 p.m. for both exchanges.

CLSA in a report said under-weight trade on Reliance Industries Ltd is over due to a combination of growth, benign consensus expectations, below-average valuations and buy back support.

Shares in Reliance Industries rose 3.1 percent.

Nomura said about 28 percent of Bharat Heavy Electricals Ltd's order book is at risk of cancellation or deferment due to either non-availability of coal linkage or cancellation of existing linkage, following the coal allocation scam, popularly dubbed Coalgate.

Shares in BHEL ended 1.9 percent higher.

Deutsche Bank upgraded India Cements Ltd to "buy" from "hold", while cutting its target price to 106 rupees from 120 rupees, citing favourable risk-reward on attractive valuations and improving returns on equity profile.

India Cements ended 3.6 percent higher.

Infosys , under its new strategy, will focus more on higher-value software and consulting that can be applied across clients and less on labour-intensive plain vanilla outsourcing services.

Infosys rose 2.7 percent.

Shares in oil marketing companies including Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd extended fall after Oil Minister S. Jaipal Reddy said there was no immediate plan to raise fuel prices.

Shares in HPCL fell 1.96 percent, BPCL fell 0.6 percent while Indian Oil Corp Ltd ended 0.3 percent higher.

More from Sify: