Sensex rallies 162 points; banking, metal & cap goods shine

Indices picked up steam after a sedate start, with the Nifty closing above the psychological 5900-mark. Brokers however said not much should be read into the upmove as it could have more to do with the expiry of derivative contracts on Thursday.

The 50-share Sensex closed at 19417.46, up 162.37 points over the previous close, and the Nifty closed at 5905.60, up 49.85 points over the previous close.

Banking, capital goods and metal shares were in demand, while FMCG, IT and auto shares lagged.

Berger Paints, Eicher Motors, Glenmark Pharma, Muthoot Finance and Unitech were among the prominent gainers, climbing 4-7 percent.

Shares of Credit Analysis and Research gained 24 percent on debut to close at Rs 924, indirectly reflecting a bullish outlook on the economy and fund raising plans by companies.

On the broader market rally, dealers speculated it could have been due to the shifting of derivatives positions to the new series. Many traders do a simultaneous cash-futures arbitrage, in which they sell the futures of a stock, and buy the underlying shares. Dealers said the sudden wave of buying in the cash market could have to do with arbitrage activity.

Foreign fund flows have dried down because of the holiday season, and local traders too are refraining from taking on major commitments.

Indian equity benchmarks gained 1 percent, helped by short covering ahead of December expiry tomorrow. Banking and financials stocks led the rally with the BSE Bankex gaining 1.6 percent.

The 30-share BSE Sensex rallied 195.17 points to 19,450.26 while the 50-share NSE Nifty went up 55.55 points to 5,911.30. However, the broader markets gained just 0.5-0.8 percent.

Meanwhile, the country's largest lenders State Bank of India and ICICI Bank surged over 2 percent. Their rival HDFC Bank and housing finance company HDFC were up 1 percent each.

Engineering conglomerate Larsen & Toubro rose 2.3 percent and state-controlled power equipment maker BHEL moved up 1.5 percent.

Cigarette major ITC, which was a loser in early trade, bounced back later to 1.3 percent.

Index heavyweight and private oil & gas producer Reliance Industries rose 1 percent and telecom operator Bharti Airtel was up 2.4 percent.

However, FMCG major Hindustan Unilever topped the selling list, falling 1 percent. Two-wheeler maker Hero Motocorp was down 0.8 percent.

In the second line shares, Arvind, Cholamandalam, Amtek Auto, DB Realty and Jindal Stainles gained 4-8 percent while Tuni Textile, Ybrant Digital, FDC, Strides Arcolab and Bayer Cropscience lost 2-10 percent.

Key indices revved up after a sedate start Wednesday, with the Sensex quoting 171 points up at 19426 in noon trade. The Nifty was up 47 points at 5903.

Brokers said the surge could have to do with short covering of positions ahead of derivatives expiry on Thursday.

Bajaj Finserv, Idea Cellular, Bharti Airtel and HDIL were the prominent gainers, up around 3 percent each.

Capital goods, metal and realty shares were among the best performers at this hour, while FMCG and IT shares lagged.

Brokers said the renewed buying interest in capital goods shares could be in anticipation of the sector recovering in 2013.

"Last year was one of those years when expectations for growth were at rock-bottom and even moderate growth prompted strong stock performances leading investors to ask whether profits should be taken. We believe not, as we expect growth to be stronger in CY13 over CY12, underpinning strong investment cases for L&T, Ultratech, Shree Cement," brokerage house Deutsche Bank said in its report on the sector last week.

Shares of Credit Analysis and Research were up 23% over its issue price at Rs 927 on Day One of listing.

Key indices were slightly up in thin trade early Wednesday. Metal and realty shares were firm, while IT shares were sluggish. Brokers said activity was low because of the holiday season.

The 30-share Sensex was up 37 points at 19292, and the Nifty was up 8 points 5863.

Key gainers among frontline shares included Hindalco, Sterlite and Tata Steel, all up around 1 percent each. Among the prominent laggards were Wipro, HUL, and Hero Motocorp, down around 1 percent each.

Dealers said foreign fund flows had eased over the last couple of weeks, and local traders too were treading cautiously.

The next key trigger for the market is the third quarter corporate earnings season, which will start in a couple of weeks time.

The probability of the Reserve Bank of India cutting policy rates at its January review has improved, but brokers say it has already been discounted by the market.

And while sentiment remains positive, resolution of the 'fiscal cliff' issue in the US and renewed foreign fund flows will determine the extent of the uptrend, say brokers.

 It's the last trading week of the year and three new IPO listings are due on the exchanges this week. The first of these - CARE Ratings debut on the bourses today in a while.  The offering was subscribed 41 times.

Analysts are expecting the stock to list at a roughly 20% premium to its issue price of  Rs750.