Sensex rallies 539 points on FM comments; metals up 4 per cent

The benchmark Sensex witnessed spectacular rally post the Finance Minister's comments on GDP (gross domestic product) growth. It surged 539 points while the Nifty rallied over 158 points in trade today, i.e. a gain of 3%. It is the strongest session in the last 35 sesssions. Positive discussions about divestment programmes in today's Cabinet meeting also added to this upsurge. Good global cues helped the indices to start on a positive note and supported the markets throughout the session.

Buying was seen across all the sectors, which supported the markets to post biggest gains in the month of December. Metal, oil & gas, power, technology, capital goods and banking were the prominent sectors; respective indices gained 2.7-4%.

Finance Minister Pranab Mukerjee said India could clock as much as 9–10% gross domestic product (GDP) growth in two-three years. Speaking at an event, an optimistic Mukherjee said FY10 growth could reach 7.75%. India, which grossed a GDP growth of 7.9% in the third quarter of this fiscal, is one of the fastest growing economies in the world and a negative farm growth thanks to a dry spell this year is also not expected to adversely impact its growth.

The GDP growth for the next two quarters was ''likely to be bright'', Mukherjee said. The government will wait until the February budget to consider withdrawing some of the fiscal stimulus measures, the FM added.

It seemed that the government has put divestment programme on fast track. It is keen to push through the follow-on public offer of state-owned NMDC this fiscal and aims to divest 8.38% stake. Government sources told CNBC-TV18 that proposal for Engineers India's (EIL) follow-on-public offering (FPO) will go to Cabinet shortly, where in the government will divest 10% (Currently, the government holds 90.40% stake in the company, as per shareholding details as on September 2009).   

Power Grid Corporation's board is likely to take up FPO plan early FY11, says company's sources. Another state owned company, Hindustan Copper will go for public issue next financial year, the management says.