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Markets rallied strongly on Wednesday on hopes that the government’s victory in the trust vote would spur the economic reform process.
For the first time in last four years, the government would be in office without the support of the Left parties.The Sensex vaulted 838 points, or 5.9 per cent, to close at 14,942 levels.
The Nifty also zoomed 236 points, or 5.6 per cent, to close at 4476. Finance Minister P Chidambaram said the government will now push ahead with its pending economic reforms agenda, particularly with financial sector reforms.
This helped to spur a big rally in the banking stocks, which were the biggest gainers on the BSE. The Bankex gained a whopping 10 per cent to close at 7,291 levels. The rally was driven mostly on heavy buying in frontline stocks, with six Sensex stocks surging by over 10-12 per cent each. These included Reliance Communication, Reliance Infrastructure, ICICI Bank, BHEL, Housing Development Finance and SBI.
The markets also benefitted from positive global cues, following a big drop in oil prices. The US markets had closed firm while European markets that open after the Indian markets also opened strong. The major Asian markets, with the exception of China, mostly ended in the green. Heavy buying was visible particularly in banking, realty and capital goods counters. “Nuclear deal is a big positive for market sentiment and it would improve further with the Left's withdrawal,” said Anand Rathi, Chairman of Anand Rathi Securities. He however added that other important factors like inflation, commodities prices, oil price and interest rate are still a concern for the markets.
Banking, realty lead rally Besides banking, the other major gainers on the BSE were capital goods and realty index, up 8.2 per cent and 8.1 per cent respectively. Yes Bank was the biggest gainer among the banking stocks, gaining 16.8 per cent. Other prominent gainers were Karnataka Bank, Federal Bank and Kotak Mahindra Bank.