The Hindu Business Line : Lower inflation, hopes on Govt sops boost markets

Mumbai, Jan. 1 Indian equities began the New Year on a positive note with benchmark indices gaining more than 2.5 per cent, buoyed by lower inflation figures and expectations of further Government measures to boost the economic growth.

The BSE Sensex closed with a gain of 256 points at 9,903 while the NSE Nifty gained 74 points to close well above the 3000-mark at 3033. Inflation eased to 6.38 per cent for the week ended December 20, 2008.

Further drop in inflation numbers, hopes of another rate cut by RBI and a possible reduction in fuel prices, boosted market sentiment, said Mr Sanjeev Patni, Head of Institutional Broking, Centrum Broking Private Ltd.

Besides the domestic factors, positive overnight close of the US market also added to the market sentiment, said a broker.

There was broad based buying support seen in Thursday’s trade, according to the provisional data released by the exchanges.

Foreign institutional investors and the domestic institutional investors were net buyers of equities worth Rs 92.04 crore and Rs 160.41 crore respectively.

Buying support also came from the proprietary traders (brokers) who were net buyers of equities worth Rs 89.58 crore.

All but two Sensex stocks closed in the green on the first day of trading. The losers were Ranbaxy Laboratories and ITC.

The auto stocks gained on expectations of a rate cut and a reduction in fuel prices, said Mr Patni.

Tata Motors gained 7.48 per cent, Maruti (5.56 per cent), Bajaj Auto (4.74 per cent) and Mahindra & Mahindra 2.84 per cent.

All the sectoral indices on the BSE moved up. BSE Realty index moved up by 6.52 per cent, Metal (6.02 per cent), Capital Goods (4.73 per cent), IT (3.83 per cent) and Auto (2.94 per cent).

Broad-based gains

Thursday’s gains were quite broad based with 2,001 scrips on the BSE gaining and only 493 scrips losing out of a total of 2,560 stocks traded.

The BSE Mid-cap and Small-cap indices moved up smartly with gains of 2.60 per cent and 3.46 per cent respectively.

One out of every six stocks hit the upper circuit with a total of 442 stocks hitting the upper circuit.

However, the volume in both the cash and future & options market was considerably low.

In the cash market on the NSE, the turnover was down by almost Rs 2,000 crore at Rs 7,016 crore as compared with a turnover of Rs 8,947 crore on the previous day as people were away from the work on New Year holiday. On the BSE, the turnover in the cash market dipped to Rs 3,088.93 crore (Rs 3,746 crore). Same was the case in the NSE’s F&O trade where the turnover was sharply down to Rs 22,397 crore compared with Rs 30,033 crore on December 31, 2008.

“The first day of the year brought joy to the hearts of the investors as the market moved up from one step to another without looking down,” said Mr Alex Mathew, head of Research at Geojit Financial Services.

In 2008, Sensex fell by more than 50 per cent, its sharpest fall since the index was launched. It fell from a high of 20,300 on January 1, 2008 to 9,647 on the last day of trading on December 31, 2008.