The BSE Sensex soared 500 points after Samajwadi Party leader Mulayam Singh Yadav said his party will continue to extend external support to the UPA government. The broader Nifty advanced over 150 points and the rupee neared the 53.50 mark to the dollar.
Mr Yadav's support comes at a crucial time as the ruling coalition has been reduced to a minority after the Trinamool Congress quit to protest against hike in fuel prices and the decision to allow foreign investment in the retail sector.
"The sentiment was beaten out of shape so this rally was expected. The strength in large caps indicates the rally will continue. Targets of 5,900-5,950 on the Nifty are possible now," independent analyst Sarvendra Srivastava said.
Markets got further boost after finance minister P Chidambaram announced the slashing of tax on overseas borrowing by local companies to 5 per cent from 20 per cent. The withholding tax liability on Indian companies would also be reduced to five per cent, he said.
At 12.52 p.m., the Sensex traded 411 points or 2.2 per cent higher at 18,761 while the Nifty jumped 134 points to 5,688.
The Sensex has now regained its 14-month high mark. The government's decision to go ahead with the notification allowing foreign investment in multi-brand retail despite widespread political opposition has boosted sentiments on the Street.
"Markets for a length of time were reflecting greater pessimism than the businesses were performing. Markets are responding to the fact that there are clear signs that these macros are being dealt with," Bharat Shah, executive director at ASK Group said.
Investors are hoping the government will go through with reforms and that the pace will continue despite the current political instability.
Strong buying was seen in aviation and retail stocks. Debt laden Kingfisher Airlines surged 5.3 per cent while SpiceJet traded with 2.7 per cent gains. Pantaloon Retail shares jumped nearly 7 per cent.
All groups of stocks traded higher on the BSE. Banks, metals, power, and capital goods stocks traded 2-3 per cent higher. On the Nifty, 47 of the 50 stocks traded higher.
Mr Yadav's support comes at a crucial time as the ruling coalition has been reduced to a minority after the Trinamool Congress quit to protest against hike in fuel prices and the decision to allow foreign investment in the retail sector.
"The sentiment was beaten out of shape so this rally was expected. The strength in large caps indicates the rally will continue. Targets of 5,900-5,950 on the Nifty are possible now," independent analyst Sarvendra Srivastava said.
Markets got further boost after finance minister P Chidambaram announced the slashing of tax on overseas borrowing by local companies to 5 per cent from 20 per cent. The withholding tax liability on Indian companies would also be reduced to five per cent, he said.
At 12.52 p.m., the Sensex traded 411 points or 2.2 per cent higher at 18,761 while the Nifty jumped 134 points to 5,688.
The Sensex has now regained its 14-month high mark. The government's decision to go ahead with the notification allowing foreign investment in multi-brand retail despite widespread political opposition has boosted sentiments on the Street.
"Markets for a length of time were reflecting greater pessimism than the businesses were performing. Markets are responding to the fact that there are clear signs that these macros are being dealt with," Bharat Shah, executive director at ASK Group said.
Investors are hoping the government will go through with reforms and that the pace will continue despite the current political instability.
Strong buying was seen in aviation and retail stocks. Debt laden Kingfisher Airlines surged 5.3 per cent while SpiceJet traded with 2.7 per cent gains. Pantaloon Retail shares jumped nearly 7 per cent.
All groups of stocks traded higher on the BSE. Banks, metals, power, and capital goods stocks traded 2-3 per cent higher. On the Nifty, 47 of the 50 stocks traded higher.
No comments:
Post a Comment