Mumbai, June 2: Stocks today regained momentum as a combination of positive global cues, expectations of bold measures from the new government and strong quarterly results by Larsen & Toubro (L&T) powered the Sensex up by 467 points.
The gains came amidst disappointing GDP data, released last Friday, which showed the economy growing only 4.7 per cent in 2013-14.
The rally also comes ahead of the Reserve Bank of India’s (RBI) bi-monthly monetary policy announcement tomorrow. The RBI is largely expected to keep key rates unchanged.
Market circles said the rally was led by capital goods and banking stocks, particularly PSU banks. Among the sectoral indices, the BSE capital goods index was the biggest gainer, surging 5 per cent following L&T’s better-than-expected results.
While L&T surged 6.5 per cent after posting a 69 per cent rise in net profit, analysts said there was now a growing confidence that the sector was set for a turnaround.
PSU bank shares gained on the news that the government was looking to implement some of the recommendations of the P.J. Nayak committee. The committee has recommended that the government’s holding in these banks be transferred to a holding company, which could raise funds for the sector.
Shares of banks gained 3-5 per cent. While the SBI gained a little over 4 per cent, Punjab National Bank rose 3.67 per cent and Bank of Baroda was up 3.75 per cent.
A marginal improvement in HSBC Indian Manufacturing Purchasing Managers Index (PMI), a measure of factory production, in May also improved sentiment. Growth in the manufacturing sector, according to the index, inched up in May to 51.4 from 51.3 in April. A PMI reading above 50 indicates growth.
Globally, Asian stocks advanced after a gauge of China’s manufacturing expanded at its fastest pace this year. Key benchmark indices in Japan, Singapore and South Korea ended in the green, while China, Hong Kong and Taiwan markets were closed for a holiday.
The Sensex resumed strong at 24368.96 and rose further to finish at a one-week high of 24684.85, a rise of 467.51 points, or 1.93 per cent, from its previous close.
The 50-issue NSE Nifty gained 132.55 points, or 1.83 per cent, to end at 7362.50.
The oil & gas index gained 2.85 per cent on the news of the diesel price hike and power by 2.38 per cent.
whereas the metal index saw a rise of nearly two per cent.