Bulls were in command as the key benchmark indices achieved their highest closing levels in more than 30 months on Thursday. With the latest data showing a fall in food and fuel inflation in early August 2010,thus reducing the pressure on the central bank for further monetary action to rein in inflation,the BSE 30-share Sensex jumped 197.82 points or 1.08%,to close at 18,454.94,its best closing since February 5,2008. The National Stock Exchanges 50-share Nifty index added 1.11 per cent to settle at 5,540.20 points.
Data showing sustained buying by foreign funds further boosted the sentiment. Firm Asian stocks also supported domestic bourses, said a dealer. The Sensex has recorded a gain of 406 points in two days. FIIs have infused Rs 1,264 crore in local stocks so far in August,taking their total investment in Indian equity to Rs 55,003 crore till now in the current year.
According to market circles,buoyant investor sentiment spurred by better growth data for the US economy and a fall in the food inflation rate supported the rally. Food inflation eased by over a percentage point to 10.35 per cent during the week ended August 7. Experts said the fall may not prompt the Reserve Bank to reverse its tight monetary policy stance at the next review on September 16.
Snapping its downward trend,Reliance Industries,which carries the maximum weight in the Sensex,increased 1.25 per cent to finish at Rs 976.80. With a smart rally of about 5 per cent,cement major ACC topped the gainers pack.
Banking stocks continued the rising streak for another day on hopes of strong lending growth. Overall,we expect banks to perform well on the top line front in the September quarter on the back of a better credit offtake and largely stable margins, said a broking firm.
ICICI Bank led the gain among banking stocks and settled 4.58 per cent higher at Rs 1,014.45. HDFC jumped 3.65 per cent and HDFC Bank 2.19 per cent. SBI,however,ended in red with a loss of 0.25 per cent. Banking stocks attracted buying as fall in food inflation will reduce pressure on the Reserve Bank to tame the high food prices.