Sensex surges ahead of RBI meet, closes 467 pts up; banks, Larsen & Toubro shares rally

Written by Agencies | Mumbai | Updated: Jun 3 2014, 03:26am hrs
BSE SensexThe BSE Sensex index was up 1.9 percent at 0950 GMT, while the broader NSE index was higher 1.8 percent. (Reuters)
BSE Sensex posted its biggest daily gains in three weeks on Monday as Larsen & Toubro surged after its quarterly earnings beat estimates while state-run banks rallied on hopes the government would consider selling some of its holdings and inject capital.

The gains snapped a two-day selling streak, and came in part after foreign investors purchased shares worth a net 29.77 billion rupees ($503.8 million) on Friday, which included about $364 million from the Canada Pension Plan Investment Board for increasing its stake in Kotak Mahindra Bank Ltd.

The net purchases came after foreign investors sold in five of the six sessions until Thursday.

Investors showed little reaction after data late on Friday showed India's economy posted a second straight year of sub-5 percent growth, while a business survey on Monday showed factory activity missed expectations although input prices rose at their slowest rate in over a year.

Markets are instead awaiting the Reserve Bank of India's policy review on Tuesday, with most analysts expecting the central bank to keep interest rates on hold but to ease up a bit on its tough inflation rhetoric in a conciliatory gesture to the new Narendra Modi government.

"Tomorrow will be the first policy under the Modi government, and we are not expecting any negative surprises. It's a buy-on-dips market and the undercurrent is firm," said Suresh Parmar, head, institutional equities at KJMC Capital Markets.

"FIIs continue to buy and we don't see any immediate downward risk. There could be some minor profit-booking, which would be absorbed."

The benchmark BSE index rose 1.93 percent to end at 24,684.85, posting its biggest daily percentage gain since May 12.

The broader NSE index ended 1.83 percent higher at 7,362.50.

Lenders were among the leading gainers, with the NSE bank sub-index gaining 3.3 percent on hopes the government would take measures to privatise some its holdings in public sector lenders.

Domestic newswire Cogencis reported on Monday the government was "seriously working" on a plan to transfer its equity in public sector banks to a holding company, citing an unnamed government official.

State Bank of India surged 4.03 percent, Punjab National Bank gained 3.65 percent, and Bank of India rose 4.7 percent.

Shares of Larsen & Toubro surged 6.5 percent after its January-March net profit rose a bigger-than-expected 69 percent, helped by a steep gain in revenue from its infrastructure and heavy engineering businesses, and gains from divestment.

NMDC Ltd closed 3.6 percent higher after the miner said on Friday its January-March profit rose by 34 percent to 19.62 billion rupees ($332 million).

Shares of Cox and Kings Ltd surged as much as 13 percent to their highest since March 2012 after the company sold the camping division of subsidiary Holidaybreak Ltd to France's Homair Vacances group for 89.2 million pounds.

HDFC Bank ended 3.4 percent higher, while Hindustan Unilever closed 0.4 percent lower as changes by MSCI to its global indices became effective after the close of markets on Friday.

Sanjeev Zarbade, Vice President- Private Client Group Research, Kotak Securities: Sensex rallied as the global cues were positive for the day. Asian equity markets rose following record highs for the S&P 500 and the Dow Jones Industrial Average last week. Data released showed China's factory activity also expanded at its fastest pace in five months in May. The bullish undertone in Indian equities has continued as markets have been rising in anticipation that the present government has the wherewithal to turnaround the sagging economy. Markets would now look forward to the monetary policy announcement tomorrow. In addition to this, progress of monsoons and later on Union Budget would be the important events in the near term.

FACTORS TO WATCH

* Euro pressured by expectations of ECB easing, eyes recent lows

* Brent climbs towards $110, China data revives demand hopes

* China PMI lifts shares, commodities, euro soft ahead of ECB

HIGHLIGHTS

* BSE index gains 1.93 pct; NSE index ends up 1.83 pct

* State-run banks rally on hopes of govt stake sale

* Market awaits central bank policy review on Tuesday

Sensex surges 467 pts as funds pick banking, oil stocks

(PTI) The BSE benchmark index Sensex today closed up by 467 points, posting its biggest single-day gain in past three weeks following massive buying by funds and retail investors mainly in banking, oil and capital goods stocks.

The 30-share index started the session on strong footing and hit the day's high of 24,709.09 points as stocks of capital goods, PSU, banking, oil and gas, power, metal and auto sectors rose sharply.

The Sensex settled at 24,684.85 points, a rise of 467.51 points, or 1.93 per cent, the biggest gain since May 12.

The broad-based Nifty of the National Stock Exchange also jumped by a whopping 132.55 points, or 1.83 per cent, to closed at 7,362.50 after testing a high of 7,368.60.

Foreign funds and retail investors accelerated their buying activity as data showed that India's manufacturing sector growth inched up in May, brokers said.

A firming trend in global markets also buoyed the sentiments, they added.

Foreign institutional investors (FIIs) bought shares worth a net Rs 2,977.62 crore last Friday, as per provisional data from the stock exchanges.

Stocks of state-run banks led by SBI were in keen demand on speculation that the government may consider selling part of its holdings, attributed major support to the Sensex, brokers said.

SBI rose by 4.23 per cent while private lender Axis Bank jumped 3.59 per cent, HDFC Bank by 3.26 per cent and ICICI Bank by 2.80 per cent.

Engineering major Larsen & Toubro was the biggest gainer among Sensex stocks as it zoomed by 6.40 per cent on the back of strong Q4 results. L&T reported 69 per cent increase in standalone net profit for the March quarter.

Car maker Maruti Suzuki surged 3.06 per cent after it reported 19.2 per cent rise in May sales.

The Mid-cap index gained by 2.16 per cent and small-cap index by 2.01 per cent. The BSE Capital goods index gained 4.93 per cent, followed by PSUs index (3.42 per cent), Banking index (3.28 per cent) and Oil and gas index (2.85 per cent).