Sensex tops 19,000 on reform hopes, liquidity; realty soars

Equity benchmarks closed at their highest levels in 17 months ahead of the Cabinet meeting to discuss foreign direct investment in the insurance and pension sectors, among other key Bills. Brokers said the market is hopeful that the government will be able to push through important economic reforms in the coming months to put the economy back on track.

The 30-share Sensex gained 188.46 points or 1 percent to close at 19058.15, and the 50-share Nifty rose 56.35 points to finish at 5,787.60. Realty and banking shares were the star performers of the day, with stocks like DLF (+ 5.4 percent), HDIL (+ 5.7 percent) SBI (+ 2.13 percent) and ICICI Bank (+ 3.05 percent) figuring on the list of big gainers.

With the government finally showing resolve to take some tough decisions, investors appear to be already pricing in an impending recovery in the economy. But the market may have run ahead of itself in the short run considering the challenges facing the economy.

Last week, the Kelkar Committee on fiscal consolidation warned that the economy was poised on the edge of a "fiscal precipice'' and recommended phasing out subsidies, the ideal but politically difficult solution.

Rating agency CRISIL today said its credit ratio (ratio of upgrades to downgrades of companies' credit ratings) declined to 0.66 for the half year ended September, compared to 0.91 during the second half of 2011-12. CRISIL said that the credit ratio may be close to its bottom as pressure on profitability and on economic growth are showing signs of abating. But it cautioned that an improvement in credit ratio could still be some way off.

''Material improvement in credit ratio will, however, take time and need substantial revival in demand. Over the near term, rating downgrades will continue to outnumber upgrades, although their severity and intensity may decline,'' said the CRISIL note.

A similar note of caution was sounded by brokerage house JP Morgan in its report earlier this week, saying that companies needed to start investing for the economy to recover.

''These data prints (IIP, inflation) will need to turnaround soon before market's patience runs out and concerns over India's growth performance could well outweigh the euphoria of the policy blitz. As we have been arguing for many months a turnaround in the pace of activity requires corporates to start investing,'' said the JP Morgan note.

Apart from positive sentiment, the rally is also being driven by a massive inflow of foreign funds. In September alone, foreign funds net bought nearly USD 4 billion of Indian equities, taking the cumulative tally for 2012 so far to around USD 16 billion.

Mark Mobius of Franklin Templeton believes emerging markets (India included) will benefit from the easy monetary policy of the US Federal Reserve in the short term.

''The Fed will likely continue to pump money into the market until it sees a significant improvement in the U.S. unemployment rate. In my opinion, this can be positive for investors in emerging markets, at least in the short run. There is lots of cash in the system right now, and I would expect more institutional flows into stocks generally. Some of those flows could wash up on emerging and frontier market shores,'' Mobius wrote in his blog.

With the second quarter earnings season getting underway in a couple of days, investors will have a better idea of whether the market can sustain current valuations.

Indian shares slightly came off day's high following profit booking in European markets after Spain's bond auction. But the Indian rupee remained above the 52 against the US dollar, rising by 30 paise to 51.85 against the US dollar, which indicates that the foreign institutional investors continued to buying into Indian equities.

The 30-share BSE Sensex rose 199.36 points to 19,069 and the 50-share NSE Nifty went up 60 points to 5,791. Even the broader markets trimmed gains to 0.5 percent from 1 percent.

France's CAC, Germany's DAX and Britain's FTSE were down 0.4 percent each as Spain sold 3.99 billion worth of Euro bonds today as against maximum target of 4 billion Euro. Investors also awaited the details of today's policy meet by European Central Bank later in the day. In the previous meeting in September, chairman Mario Draghi unveiled an unlimited bond buying programme.

Back home, country's largest lenders State Bank of India, ICICI Bank, HDFC Bank and Axis Bank gained 1.7-3 percent.

Housing finance company HDFC and cigarette major ITC were up 1.7 percent each. Index heavyweights Reliance Industries and Larsen & Toubro rose 0.9 percent each.

Shares of Bharti, ONGC, Tata Motors, Tata Steel, Maruti, Dr Reddy's Labs and GAIL moved up 1.3-2.5 percent.

State-run BHEL remained on buyers' radar with 6 percent gains. Drug producer Cipla tanked 3 percent.

Shares of Mahindra & Mahindra, TCS, Bajaj Auto, Coal India, Tata Power and Hero Motocorp were down 0.5-1.3 percent.

Advancing shares outnumbered declining by a ratio of 925 to 541 on the National Stock Exchange.

The 50-share NSE Nifty extended gains, surpassing the 5,800 level for the first time since April 29, 2011. The rally, after two-day consolidation, attributed to the further reforms that will be announced later in the day today.

The BSE benchmark rose 201.64 points to 19,071.33, supported by banks, oil & gas, telecom and infrastructure stocks. Meanwhile, the NSE benchmark, which touched an intraday high of 5,807.25, moved up 60.30 points to 5,791.55.

Professional investor Sangeeta Purushottam says the current rally has more legs. "We are seeing a combination of liquidity as well as positive newsflow on the reform front. It has come at a time when expectations were low. So, as long as the newsflow continues and we see liquidity coming in, I think this rally certainly has more legs," he adds.

In the last month, the government has initiated reforms by raising diesel price by Rs 5 a litre and allowing FDI in aviation and retail sectors. It is likely to be another eventful day today as the UPA government is set for a second push for Prime Minister Manmohan Singh's reform measures.

The Cabinet is expected to clear 26 per cent FDI in pensions and 46 per cent in insurance today.

The BSE Realty Index surged over 5 percent as shares of DB Realty, DLF, HDIL, Indiabulls Real, Parsvnath Developers, Presitge Estates, Unitech and Sobha Developers rallied 5-10 percent.

Country's largest private sector lender ICICI Bank was up over 3 percent while its rivals HDFC Bank and State Bank of India gained 1.5 percent.

State-run power equipment maker BHEL was the top gainer among largecaps, rising 6.5 percent. Index heavyweights ITC, Reliance Industries, ONGC, Bharti and Tata Motors were up 1-1.5 percent.

Drug producer Cipla fell over 2 percent. Utility vehicle maker M&M and two-wheeler major Hero Motocorp declined 1 percent each.

European shares rose as better economic data from the United States eased fears over global growth, while the euro strengthened ahead of an European Central Bank policy meeting later where is expected to keep rates unchanged. France's CAC, Germany's DAX and Britain's FTSE were marginally higher.

The BSE Sensex continued to trade above the 19000 level ahead of more reforms that are going to be announced by the government today evening. The Indian rupee too extended its gains following rally in equities, rising by 29 paise to 51.86 against the US dollar.

The 30-share BSE benchmark jumped 195 points or 1.03 percent to 19,064.75 and the 50-share NSE benchmark was up 62 points or 1.08 percent to 5,792.90.

State-owned power equipment maker BHEL was the top gainer today with nearly 6 percent gains. Country's largest private sector lenders ICICI Bank, HDFC Bank and Axis Bank were up 2-3.5 percent.

Ambuja Cements, which reported a growth of 4.72 percent YoY in sales of September at 1.55 million tonne, rose 9 percent in four consecutive sessions. Today the stock, which hit a fresh 52-week high of Rs 220.20, was up 2 percent.

Oil retailer BPCL shot up 4.6 percent due to steep fall in crude oil prices. Realty major DLF surged over 4 percent.

Top telecom operator Bharti Airtel and world's sixth largest steel producer Tata Steel gained 2 percent each.

Shares of Cipla, Hero Motocorp, Coal India, M&M and TCS were down 0.4-1 percent. Lupin plunged 3 percent.

In the second line shares, Edelweiss Financial surged 12 percent. Shree Global, Dewan Housing, Indiabulls Real and HDIL gained 6-10 percent.

Gujarat Gas fell 9 percent after the BG Group sold its 65.23% stake in the company at a steep discount to market price, for Rs 2460 crore to GSPC.

Vakrangee, Ipca Labs, Hexaware Tech and CRISIL were down 3-6 percent.

Advancers outnumbered decliners by a ratio of 1667 to 958 on the National Stock Exchange.

The 50-share NSE Nifty remained strongly higher since early trade, inching towards the 5800 level led by banking, oil & gas, capital goods and telecom stocks. The rally was attributed to the cabinet meeting that will be held later in the day to consider companies, insurance, pension, competition and forward contracts act.

The BSE benchmark gained 187 points or 0.99 percent at 19,056.86 while the NSE benchmark moved up 60.55 points or 1.06 percent to 5,791.80.

Above 5600, Regan F Homavazir of Darashaw feels the market has the potential to move up to 6300 now.

Above 5600, Regan F Homavazir of Darashaw feels the market has the potential to move up to 6300 now.

Housing finance company HDFC and private sector lender HDFC rallied 1.8 percent while its rival ICICI Bank rose 3.5 percent.

Pubilc sector lender State Bank of India and commercial vehicle maker Tata Motors were up 1.4 percent each.

State-run power equipment maker BHEL jumped 4.55 percent, topping the buying list among largecaps. Engineering and construction major Larsen & Toubro was up 1 percent.

Private oil & gas producer Reliance Industries and cigarette major ITC went up over 0.5 percent.

Telecom operator Bharti Airtel and state-owned gas transportation services provider GAIL rallied 2 percent each.

Technology majors TCS and Infosys fell 0.5 percent due to gains in rupee. The Indian rupee was up by 16 paise to 52 against the US dollar.

Utility vehicle maker Mahindra & Mahindra, drug producer Cipla, two-wheeler major Hero Motocorp and coal mining company Coal India were down 0.6-0.9 percent.

The 30-share BSE Sensex gained as much as 218 points in early trade ahead of the cabinet meeting over insurance and pensions act today. The index crossed the 19000 level for the first time since July 8, 2011, supported majorly by banks, telecom, capital goods and oil & gas stocks.

But the upmove was somewhat arrested by TCS and Infosys, which fell 0.2-0.5 percent as the Indian rupee rose by 17 paise to 51.99 against the US dollar. Drug producer Cipla and two-wheeler major Hero Motocorp were other losers, falling 1-1.7 percent.

The BSE benchmark moved up 175 points to 19,044.42 and the NSE benchmark was up 55 points or 0.96 percent at 5,786.30.

Hemant Thukral, Aditya Birla Money says the way FII flows are coming in, there is a fair chance that the Nifty will revisit 5,850 on the upside. Foreign institutional investors have net bought nearly Rs 42,000 crore worth of shares since June 2012.

According to him, the market looks very strong, unless and until it doesn't go below the 5,650 mark.

Country's largest private sector lender ICICI Bank rallied 2.7 percent while its rival State Bank of India was up 1 percent. Housing finance company HDFC and private sector lender HDFC Bank gained 1.7 percent each.

State-owned power equipment maker BHEL topped the buying list with 3 percent gains while engineering conglomerate Larsen & Toubro rose 1 percent.

Index heavyweights Reliance Industries and ITC were up 1 percent. Commercial vehicle maker Tata Motors and telecom operator Bharti Airtel went up 1.6 percent.

Oil retailers BPCL, IOC and HPCL rallied 2-4.5 percent on the back of steep fall in crude oil prices yesterday after inventory report.

Brent crude declined 3% to close at USD 108.2 a barrel yesterday. EIA said crude inventory was down by 4,82,000 barrels for the week ended September 28 as against expectations of 1.5 million barrels rise.

Advancing shares outnumbered declining by 967 to 359 on the National Stock Exchange.

The BSE Sensex has touched a new 14-month high in early trade on Thursday, surpassing the 19000 level quite nicely - for the first time since July 8, 2011 - ahead of cabinet meeting for further reforms to revive the sluggish economy.

The 30-share BSE Sensex rose 141.79 points to 19,011.48 and the 50-share NSE Nifty went up 45 points to 5,775.95, supported by banks, FMCG, oil & gas, capital goods and auto stocks.

The UPA government is set for a second push for Prime Minister Manmohan Singh's reform measures. The Cabinet is expected to clear 26 percent FDI in pensions and 46 percent in insurance in today's meeting.

The Cabinet will also consider the Forward Contract Regulation Act (Amendment) Bill to empower commodity markets regulator FMC with greater financial autonomy. It will also take up the Companies Bill to bring all sectors under the Companies Act, amendment to the Competition Act and a proposal for operationalising the Infrastructure Development Fund (IDF), sources said.

The Indian rupee too continued to appreciate ahead of this Cabinet meeting, rising by 23 paise to 51.93 against the US dollar. Even foreign institutional investors have consistently been buying into Indian equity shares; they have net purchased over Rs 800 crore worth of shares in last two days and bought Rs 20769 crore in September (highest inflow since February 2012).

ICICI Bank, HDFC Bank, ITC, Reliance Industries, HDFC, Tata Motors, SBI, Larsen & Toubro, HUL, Bharti Airtel, ONGC and BHEL were on buyers' radar.

BPCL rose over 2 percent on sharp fall in crude oil pirces. Brent crude fell 3% to close at USD 108.2 a barrel yesterday.

Defensives like Infosys, TCS and Cipla were under pressure.

The CNX Midcap Index was up 0.7 percent at 8,029 and the BSE Smallcap rose 0.5 percent to 7,220. About three shares advanced for every share declining on the National Stock Exchange.

In the second line shares, Gujarat Gas plunged 11 percent after the BG Group sold its 65.23 percent stake in the company for Rs 2460 crore to GSPC.

Raymond lost 2 percent as the Economic Times reported that the company's plans to sell 9.4 acres Thane land failed as developer backs out.

Brokerage stocks: Edelweiss Financial hit a 52-week high of Rs 40.40, which gained over 8 percent. India Infoline was up 6 percent.

Anant Raj Industries, Lovable, Shree Renuka, IVRCL, UB Holdings and Orchid Chemical went up 1.5-2.5 percent.