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Stocks spring a surprise

Mumbai, June 6: Stocks today gave investors a rare occasion to rejoice with a spectacular rally propelled by both domestic and global factors.

Encouraged by the government’s moves on pro-investment measures and hopes that the RBI would cut rates, investors lifted the BSE Sensex by nearly 434 points — the highest single-day gain so far this year.

Investors became richer by over Rs 1.30 lakh crore, with the market capitalisation of the BSE climbing to Rs 58.64 lakh crore.

Positive cues from the global markets on hopes that the US and Europe will announce initiatives to fix their economies aided the rally.

Key benchmark indices in Hong Kong, Japan, Taiwan and Singapore rose between 0.80 per cent and 1.81 per cent.

The euro also strengthened against the dollar, paving the way for the rupee to close higher against the US greenback.

“Sentiments improved globally on hopes of ECB unveiling additional long-term refinancing operation to improve the Eurozone situation,” said Shanu Goel, senior research analyst at Bonanza Portfolio.

At a time slowing policy reforms had been a major hurdle in the markets, expectations over a meeting called by Prime Minister Manmohan Singh to discuss stalled infrastructure projects prompted brisk buying.

While infrastructure stocks extended gains, banking and auto scrips rose amid talks of a rate cut by the RBI.

The benchmark index opened at 16100.36, a rise of 80 points, and gained further with the Asian and European markets remaining in the green.

After touching the day’s high of 16494.50, the Sensex closed at 16454.30, up 433.66 points, or 2.71 per cent. On January 3, the Sensex had gained 421.44 points.

The 50-share NSE Nifty shot up 133.80 points, or 2.75 per cent, to close at 4997.10 after touching the psychological 5000-level.

Jagannadham Thunuguntla, strategist and head of research at SMC Global Securities, said a technical bounce-back was expected as the markets were over-sold.

“A technical bounce-back was waiting to happen. There may be another 100-200 point rally in the Nifty in the offing,” he added.

However, one analyst cautioned that foreign investors had been net sellers over the past few trading sessions. Foreign institutional investors sold equities worth Rs 680.86 crore on Tuesday.

“They (FIIs) will not change their outlook in one day,” the analyst added.

The rupee today appreciated by 28 paise to close at a one-week high of 55.36 against the dollar.

 
 
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