Sensex closes up 568 pts, sees 3rd biggest rally of 2011

The third biggest rally of 2011 took place on the first day of the week. The 30-share BSE Sensex surged 567.5 points, to close at 16,416.33. The market witnessed a relief rally right from the start of the trade and at one point the Sensex rose more than 600 points. Meanwhile, the 50-share NSE Nifty jumped 172 points, to end at 4,920 after hitting an intra-day high of 4,934.40.

The market was hammered consistently for the last five weeks. But short covering, build-up of fresh longs and positive global cues brought the bulls back on the Dalal Street. Partly, the global cues came in from the fact that the US was not looking at QE as the only solution to its problems. On Friday, Fed chairman Ben Bernanke said the country will look at other tools to stimulate the economy. That instilled confidence for sure, says Deven Choksey of KR Choksey Securities.

However, the market saw some profit booking in last few minutes of trade. Market would be moving in the direction of 5,150-5,200 level in September, Choksey told CNBC-TV18.

"I think 4,700-4,750 level will play an important bottom level for the time being.  We could see nearly 500 points jump from this level that is somewhere around 5,150-5,200. We are going to be range of 4,700-5,200 for the month of September," he said.

Technology, realty, metal, bank and capital goods sectors led the market from the front; respective sectoral indices gained 4-5%.

Banking stocks maintained their uptrend after RBI released draft guidelines for new banking licenses in late trade.