Indian markets continued their good run for the second day, as banking stocks rallied, spurred by better-than-expected inflation figures. The Sensex surged 523 points to 13,635 levels. The broader market index Nifty advanced by 3.7 per cent to 4092. The annual rate of inflation remained almost steady at 11.91 per cent for the week ended 5 July 2008, marginally higher than 11.89 per cent in the previous week. The inflation figures were announced on Thursday after the markets had closed.
The lower-than-expected inflation figures pulled up the banking stocks on the hope that the Reserve Bank of India might not increase the rates at its review meeting at the end of this month. The strong performances of the US markets also weighed on the market sentiment. Still many analysts feel that it will take a long time for the markets to get into a positive mode. “The uncertainties in market are likely to continue. If the government passes the trust vote, various other factors like oil and inflation would impact markets,” said Upendra Kulkarni, Director & CEO, Fortress Financial Services.
Buying was visible across all the sectors barring IT and metals. Banking lead the rally, with the index on the BSE advancing over 8 per cent. Other major sectoral gainers on the BSE were realty and oil & gas, up by 4 per cent.
The IT stocks were pulled down by the results of software major Wipro and Satyam, with the sectoral index on the BSE down by 2.57 per cent. Wipro and Satyam Wipro “reported disappointing results within their core businesses”, said CLSA. The Wipro stocked ended down by 3.75 per cent to Rs 365, while Satyam closed down by 7.5 per cent to Rs 382.
Among the BSE-30 stocks, banking stocks led the gainers. ICICI Bank surged 12 per cent to Rs 617 while Housing Development Financial advanced by 9.5 per cent to Rs 2,067 and HDFC Bank gained 7.9 per cent to Rs 1,033. “There will be a sharp movement upwards if political uncertainty is removed. I don’t expect nifty to breach 3800 on the downside,” added Ashu Madan, National Head, Religare Securities. However, the European markets, which open after the Indian markets, opened weak on worries over corporate earnings. The Asian markets presented a mixed picture, with Shanghai Composite and Hong Kong’s Hang Seng ending in the green. The other major markets closed lower.