Sensex, Nifty hit two-year high on inflation, GAAR

MUMBAI Mon Jan 14, 2013 4:34pm IST

1 of 2. A road sign stands next to the Bombay Stock Exchange building (R), August 3, 2005.

Credit: Reuters/Arko Datta/Files

Related Topics



MUMBAI (Reuters) - The BSE Sensex and Nifty rose more than 1 percent on Monday to two-year highs after a slower-than-expected rise in inflation cemented hopes the RBI will cut interest rates later this month, boosting banks and property shares such as DLF.

Sentiment was also supported after India delayed the implementation of controversial rules on tax avoidance to 2016, helping remove uncertainty about whether foreign investors would continue their strong buying of domestic equities. (Read story, click here)

Infosys (INFY.NS) rallied for a second session to a nine-month high after some brokerages including Barclays upgraded their ratings on the stock following its better-than-expected earnings and revenue guidance.

"The enthusiasm with regards to reforms continuing, lower inflation and tepid industrial growth are making way for rate cut, which have led to a rally in the market," said Kaushik Dani, fund manager at Peerless Mutual Fund.

The BSE Sensex rose 1.23 percent, or 242.77 points, to end at 19,906.41, its highest close since January 6, 2011, and its biggest single-day percentage gain since November 29, 2012.

The broader Nifty rose 1.22 percent, or 72.75 points, to end at 6,024.05, closing above the psychologically important 6,000 level and matching the same milestones as those for the Sensex.

Nomura said it expects the Sensex to touch 21,700 by the end of 2013, on the back of positive factors including potential rate cuts, easier domestic liquidity and reform momentum. (Get details, click here)

However, Nomura warned risks could include a "broken" capex cycle, weak government finances, and a poor external account.

Gains on Monday were sparked by data showing the headline inflation slowed to its lowest level in three years. Analysts now expect at least a 25 basis point rate cut by the Reserve Bank of India at its policy review on January 29.

Rate-sensitive stocks led gainers, with real estate developer DLF jumping 7.3 percent, marking its biggest single-day percentage gain since October 28, 2011, helped as well by J.P.Morgan's upgrade to "overweight" from "neutral".

The investment bank said DLF stands to benefit from debt reduction and the launch of luxury projects in Gurgaon, a suburb of New Delhi.

Among banks, ICICI Bank (ICBK.NS) gained 1.9 percent, while State Bank of India rose 0.4 percent.

Infosys rose 3.5 percent, after already gaining nearly 17 percent on Friday. CLSA, J.P.Morgan and Barclays Capital were among the banks that upgraded the stock following its earnings results.

Rival Tata Consultancy Services (TCS.NS) gained 2.15 percent ahead of its October-December earnings results due later in the day.

ITC (ITC.NS) gained 1.7 percent after Goldman Sachs said a recent correction in shares of the cigarette maker is overdone, and that the cigarette maker has "robust" pricing power and will benefit from the launch of new cigarettes.

However, among stocks that fell, Jaiprakash Power Ventures Ltd (JAPR.NS) shares dropped 4.6 percent on fears of equity dilution after its board approved raising up to 35 billion rupees.

(Additional reporting by Manoj Dharra; Editing by Jijo Jacob)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Shares Hit Record

Sensex, Nifty rise to second consecutive record high

Sensex surges 500 points on BOJ easing, L&T gains

The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro.  Full Article 


Indian Economy

Indian Economy

India's fiscal deficit in H1 almost 83 pct of full-year target.  Full Article 

M&M Earnings

M&M Earnings

M&M Q2 net profit down 4 percent, hit by poor monsoon.  Full Article 

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 



Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage