Sensex posts biggest gain in 2 years

After a hasty retreat last week, the Bulls charged back into action with a 302-point rally on expectations of robust......

After a hasty retreat last week, the Bulls charged back into action with a 302-point rally on expectations of robust earnings from software services firms and good fourth quarter profits by India Inc in general.

This was the biggest rise in the benchmark Sensex in the last two years after the index shot up by 372 points on May 18, 2004. Strong guidance for FY 2007 by IT bellwether Infosys Technologies, good Q3 March 2006 results by Gujarat Ambuja Cements GACL and strong Q4 numbers of HDFC Bank put the market back into the bull orbit on Monday.

Infosys rose nearly 7 per cent to Rs 3,230.30 after it reported on Friday a 21 per cent rise in quarterly net profit and forecast better earnings ahead. Top software services exporter Tata Consultancy Services climbed nearly 6 per cent to Rs 1,903.60. Earlier, there were fears that Infosys might issue a muted guidance for FY 2007 which was one of the reasons that had triggered profit-taking on the bourses, just on the eve of its results.

The Sensex had plummeted by a whopping 352 points last week due to a major correction. 8216;8216;The recovery on Monday was not uniform. Many mid-cap and small-cap stocks have not kept pace with top A Group shares. The steep rise in the index was mainly due to the rise in key Sensex stocks like Infy and Reliance,8221; said a fund manager.

Volatility was high as the Sensex moved up and down during the day, despite holding on to positive territory throughout the day. Robust results from GACL sent a host of cement stocks spurting in the latter part of the trading session whereas IT stocks got a lift from the beginning on the back of Infosys results.

Sensex jumped 302.45 points 2.6 to settle at 11,539.68. On May 18, 2004, BSE had risen 372 points to 4,877.02 on bargain hunting after it had tumbled in the preceding two trading sessions, following the defeat of the BJP-led coalition government in the 2004 General Elections.

The market shrugged of a surge in oil prices. US oil futures hit 70 a barrel for the first time in seven-and-a-half months on Monday as tension mounted between Iran and the West over Tehran8217;s nuclear ambitions. However, today8217;s rally materialised on a low volume.

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On Tuesday, the RBI is expected to raise its key short-term interest rate by 25 basis points to 5.75. A 25 basis points hike in short-term rates has already been factored into share prices. 8216;8216;The near-term activity on the bourses may be more stock specific as institutional investors may churn their portfolios based on Q4 results and business outlook by company managements. The upmove on the bourses may be capped in the near term due to assembly elections,8217;8217; said BSE dealer Pawan Dharnidharka.