A strong rally in energy stocks following the government decision to virtually deregulate diesel prices to rein in fiscal deficit boosted investor confidence as the benchmark CNX-Nifty today jumped by 37 points at the NSE.
Continuing with its series of policy reforms, the Centre, in a bold decision, further de-controlled oil sector and allowed oil marketing companies to "make small correction (in diesel prices) from time to time" to cut losses. Also, in a relief to the common man, it raised the cap on subsidised LPG cylinders to nine from six earlier.
The government is making all efforts to restrict fiscal deficit to 5.3 per cent of GDP in the current fiscal to avoid downgrading by international rating agencies.
Overcoming the initial sluggishness and volatility due to overnight sharp sell-off, the market gained momentum in afternoon amid caution ahead of the Cabinet meet.
The market turned bullish following the Cabinet decision to allow oil firm to hike diesel prices. The rally was spearheaded by frontline heavy-weights and OMCs which zoomed to multi-month highs amid huge volumes.
The oil sector index galloped by 214 points to end at 8,458.05. Firm buying was also seen in technology counters.
Telecom stocks, too, attracted buying interest after the government approved 50 per cent reduction in reserve price of spectrum used by CDMA operators. However, profit-taking in pharma, FMCG and select bluechip counters capped gains.
The 50-share Nifty fluctuated between a high of 6,053.20 and a low of 5,988.10 before ending at 6,039.20, a gain of 37.35 points, or 0.62 per cent, over the last close.
HCL Tech, BPCL, DLF, ONGC, Reliance, Wipro, Bharti Airtel, Tata Motors, SBIN and Lupin were top gainers from the Nifty pack. The key laggards included Cipla, RInfra, ACC, BoB, HDFC, Ranbaxy, ICICI Bank, Hindalco, Bajaj Auto and UltraTech.
Turnover in cash segment jumped to Rs 13,642.54 crore from Rs 12,788.38 crore yesterday. A total of 6,901.66 lakh shares changed hands in 61,92,287 trades. The market capitalisation stood at Rs 69,18,026 crore.