June 3, 2014 / 10:18 AM / 3 years ago

Sensex, Nifty hit record closing high; metal stocks surge

People walk past the Bombay Stock Exchange (BSE) building in Mumbai May 13, 2014.Danish Siddiqui/Files

MUMBAI (Reuters) - The BSE Sensex and Nifty rose on Tuesday to a record closing high as metal stocks such as Tata Steel surged after surveys showed China's factory and services sectors had their best performance in months, while the RBI held rates steady and toned down its inflation rhetoric.

China's factory sector turned in its best performance in four months in May as export orders improved although activity still contracted, a private survey showed on Tuesday, adding to signs the economy may be stabilising.

Sentiment was also supported after the Reserve Bank of India eased rules to spur bank lending and toned down its inflation rhetoric in moves set to be welcomed by a new pro-business government determined to revive economic growth.

"I am hopeful that we may see a rate cut soon provided the government's administrative actions finally succeed in reducing food inflation," said Motilal Oswal, chairman and managing director at Motilal Oswal Financial Services Ltd.

The Sensex rose 0.7 percent to a record closing high of 24,858.59, surpassing its previous milestone set on May 26.

The Nifty gained 0.7 percent a record closing high of 7,415.85, surpassing its previous record hit on May 23.

Steel shares gained after surveys showed China's factory and services sectors had their best showings in months in May.

Tata Steel rose 6.9 percent, Steel Authority of India gained 4.3 percent, and JSW Steel rose 4 percent.

Among other metal stocks, Sesa Sterlite surged 6.4 percent.

Cement stocks also gained on value buying. ACC rose 2.5 percent and Ambuja Cement ended up 3.7 percent.

Sugar refiners rose sharply on expectations that the new government would push ethanol blending in petrol and increase the import duty on the sweetener to support local prices, several traders said.

Bajaj Hindusthan Ltd rose 10 percent, Dhampur Sugar Mills Ltd advanced 10.8 percent, Shree Renuka Sugars Ltd gained 10.7 percent, and Balrampur Chini Mills Ltd ended up 7.8 percent

Zee Entertainment Enterprises gained 2.3 percent after the RBI on Monday said foreign institutional investors can purchase up to 100 percent of stake in the company, up from the earlier limit of 49 per cent.

However, bank shares ended mixed after the RBI kept its key policy rate steady and toned down its inflation rhetoric, while cutting the amount of bonds lenders must set aside with the RBI.

HDFC Bank rose 0.5 percent, while Kotak Mahindra Bank ended down 1.5 percent.

Reporting by Abhishek Vishnoi; Editing by Subhranshu Sahu

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