Mumbai, Sept. 2: The Sensex leapt 266 points to a two-week high on Monday as the bourses shook off concerns raised by the weak first-quarter growth rate of 4.4 per cent and data showed that the manufacturing sector had contracted for the first time in four years.
Instead, investors chose to focus on encouraging news coming from overseas markets, which helped to propel equities to register their fourth straight session of gains.
Buoyed by gains in key heavyweights such as ITC, the 30-share BSE Sensex closed at 18886.13, a rise of 266.41 points, or 1.43 per cent. The index is at its highest level since the August 14 close of 19367.59.
Analysts said the market chose to gloss over the weak first-quarter growth number as it had been largely anticipated and factored in. A host of brokerages have in the recent past taken this into account while trimming their GDP forecasts for this fiscal.
The markets also ignored fresh data from a survey by HSBC/Markit, whose index on India’s manufacturing sector activity showed a contraction for the first time in over four-and-a-half years in August as both output and business orders witnessed a significant decline.
Brokers said that since the markets have been in an over-sold territory, investors used the opportunity to concentrate on good news that came in the form of a hike in petrol price by Rs 2.35 per litre and diesel by 50 paise per litre.
Further, a delay in military action in Syria, apart from strong manufacturing data in China which showed that a slowdown in the mainland was almost over, buoyed sentiment. This had resulted in Asian stocks opening in the green.
“Since the markets were over-sold, there was some amount of short-covering as well. The bellwether index also rose as ITC surged on news that the company had raised the price of a major cigarette brand,” a broker said.
ITC and Reliance Industries climbed 3.75 per cent and 3.78 per cent, respectively, and together contributed over 140 points to the index's gain.
The broader Nifty index on the National Stock Exchange rose 78.95 points, or 1.44 per cent, to 5550.75. The SX40 index on the MCX-SX, closed at 11176.25, up 237.76 points.
Most Asian stocks ended higher with key indices in Hong Kong, Japan, Taiwan and Singapore nudging upwards. South Korea eased and China ruled steady. In Europe, indices in UK, France and Germany firmed up.
Experts, however, weren’t ready to speculate about the market’s ability to cling to these gains. They said the domestic markets continued to face various headwinds that included a potential attack on Syria which could push up global crude oil prices.
Attention is also being focused on the meeting of the Federal Open Market Committee of the US Federal Reserve, which is due to begin on September 17.
“It (the gain seen today) does not mean that the skies are clear and we can trade or invest confidently in the markets,” said Shrikant Chouhan, head — technical research, Kotak Securities.