Strong auto sales boost markets again,Sensex gains 272 points

Led by auto shares,stock markets rose for a second day,rallying 1.6 per cent on Tuesday,as easing concerns about the Dubai debt crisis...

Led by auto shares,stock markets rose for a second day,rallying 1.6 per cent on Tuesday,as easing concerns about the Dubai debt crisis and robust November automobile sales boosted investor confidence on the growth outlook. The 30-share BSE Sensex closed up 272.05 points at 17,198.27. The 50-share NSE Nifty index closed up 1.8 per cent at 5,122.

The market,which had climbed 1.8 per cent on Monday after a surprisingly strong 7.9 per cent economic expansion in the September quarter,was also helped by higher world markets. With this,the Sensex has soared 566 points in the last two days.

Tata Motors soared to an 18-month high of Rs 708 as investors bet the countrys top truck maker that also produces cars would be a key beneficiary as the economy picks up steam. The stock ended up 6 per cent at Rs 700.75. Top car maker Maruti Suzuki raced 1.7 per cent to Rs 1,588.15 after it posted a 67 per cent jump in November sales from a year earlier. Mahindra & Mahindra,the No. 1 tractor and utility vehicle maker,jumped 4.8 per cent to Rs 1,078 as its sales soared 96 per cent.

The latest numbers do indicate that industry and services are growing very strongly. This could go to offset to a very large extent the impact of the decline in agricultural production. Indias exports fell 6.6 per cent in October extending the decline for the 13th month in a row,but the downward trend has slowed down amid some revival in demand in overseas markets. The pace of falling exports has slowed down also because of lower exports in the same month last year.

Brokers said the market was also helped by the realisation that India doesnt really have a direct impact from the Dubai crisis. The benchmark has rallied more than 78 per cent in 2009,with foreign funds pumping in more than $15 billion.

Liquidity flows are strong from foreign funds and domestic insurance companies. But there is a valuation challenge,as earnings upgrade have not been as fast, said an analyst. India’s manufacturing activity expanded for the eighth straight month in November but at its weakest pace since March due to a slowdown in growth of output,new business and employment,a survey showed. The HSBC Markit Purchasing Managers Index (PMI),based on a survey of 500 companies,fell to 53 in November from 54.5 in October.

With agencies