The strong global rally on hopes that the US Fed is close to taking a pause in its interest rate hikes, lifted the indices much beyond most traders' expectations. Being the first day after an F&O settlement, traders were sitting on relatively light positions, which helped them to build large positions in the current series.

Indices started on a strong note as expected and the Sensex went past 10500 with ease. Both frontline indices held on to their position till mid-afternoon, when there was a modest dip on profit booking.

Markets soon overcome that weakness and the indices comfortably went past their early highs. Sensex saw a high of 10627 and the Nifty touched 3134 in closing trades.

Sensex closed with gains of 447 points at 10609 and the Nifty gained 130 points to close at 3128. Nifty July futures ended at a discount of 6 points to the spot index.

HLL was the biggest gainer among index stocks and ended nearly 9.5 per cent higher, its best single day gain in a long time. The stock found buyers on hopes that monsoon revival would lift rural income and hence demand for consumer products.

Among other FMCG stocks, ITC added nearly 4 per cent and Tata Tea closed nearly 3 per cent higher.

Index heavyweights ONGC and Reliance Industries ended with gains of over 5 per cent each and provided great strength to the indices.

Maruti had a very good session on multiple news flows and ended more than 8.5 per cent higher. There are unconfirmed reports of a price hike by the company. It is also speculated that Maruti would assemble up to 1 lakh cars per year for Nissan.

Among other auto stocks, Tata Motors gained nearly 4 per cent and M&M gained over 3.5 per cent. Bajaj Auto added 4.5 per cent.

Metal was the best performing sector today, following the revival in international metal prices. SAIL soared and ended nearly 8.5 per cent higher which Tata Steel gained over 4.5 per cent.

Among other metal stocks, Hindalco gained 8 per cent and Nalco added over 4 per cent.

Satyam was the best performer among technology stocks, adding more than 4.5 per cent. TCS and Wipro added around 3.5 per cent each and Infosys gained close to 3 per cent.

Reliance Communications was the big winner among telecom stocks, closing 11.5 per cent higher. MTNL gained nearly 6 per cent while VSNL added 3.5 per cent. Bharti Airtel ended nearly 3 per cent higher.

Engineering and capital goods stocks continued their major uptrend and closed with significant gains. Suzlon added 7 per cent to take total gains over the last 2 sessions to 19 per cent. BEML ended 11.5 per cent higher.

BHEL maintained the up trend and gained nearly 6 per cent. L&T gained 5.5 per cent and Siemens closed nearly 4 per cent higher. ABB closed more than 2 per cent higher.

Cement stocks had a good day with ACC and Gujarat Ambuja adding nearly 6 per cent each. Grasim added nearly 5.5 per cent.

HDFC Bank was the big winner among banking stocks and ended more than 6 per cent higher. HDFC added nearly 5 per cent. ICICI Bank closed 2.5 per cent higher and SBI gained nearly 2 per cent.

Among other major gainers, Zee Tele added 8.5 per cent and IPCL gained over 7 per cent.

Jet Airways was the biggest loser among index stocks after a downgrade by a large foreign brokerage. The stock ended more than 3.5 per cent lower, also affected by the rising oil prices.

Higher crude prices pulled down BPCL by more than 1.5 per cent. Ranbaxy was the third loser among Nifty stocks, closing nearly a per cent lower.

Global markets / crude oil
US markets soared yesterday as many analysts saw a softer stand on inflation in the US Fed statement. This increased the hopes that Fed is close to ending its rate hike cycle and may pause as early as August. The upward revision of first quarter US GDP growth improved expectations of strong corporate performance.

The Dow gained nearly 2 per cent and the S&P 500 ended more than 2.1 per cent higher. Technology stocks were the best performers and the NASDAQ added nearly 3 per cent, its best performance in recent months.

Asian markets surged for the second day today, on hopes that a pause by the US Fed would help sustain investment flows into regional markets. Indonesia was the best performer, closing 2.8 per cent higher. Japan, South Korea and Hong Kong closed with gains of around 2.5 per cent each. Singapore gained 2 per cent and Thailand closed more than a per cent higher.

European markets are also rallying for the second day, helped by the up trend in other major markets. Major indices are trading with gains of around a per cent each.

Crude oil prices continued the uptrend yesterday, helped by a decline in US inventory of crude oil and refined products.

Aggressive posturing by Iran over the nuclear dispute also supported the rally. Near month NYMEX futures closed $1.33 higher at $73.52 per barrel yesterday. The commodity is trading with modest gains in early European trades today.

Large-cap news flow

• Siemens India has announced that its parent company Siemens AG has acquired the diagnostics business of Bayer AG worldwide for a total consideration of €4.2 billion. It is expected that Bayer Diagnostics India would come under Siemens India in future and Siemens would make an open offer for Bayer Diagnostics following the acquisition.
  
  
• Wockardt has acquired the Indian subsidiary of a Dutch company which manufactures infant nutrition brands Farex and Protinex for an undisclosed amount. The 2 brands currently has combined annual sales of Rs60 crores and Wockardt's total sales of nutrition products would go up to Rs120 crore.
  
  
• ACC has completed the sale of a cement unit in the state of Andhra Pradesh.

Mid-Cap Action

Smaller stocks also rallied today, continuing the up trend from yesterday. But gains on the mid-cap and small cap indices were lower than the frontline indices. Many of the popular mid-caps ended with significant gains but traders were not as enthusiastic as they were towards the end of last week.

The CNX Mid-Cap index ended with gains of 140 points, or 3.67 per cent, to end the day at 3945. Market breadth on the NSE was highly positive throughout the day.

BSE mid-cap index rallied 3.44 per cent and the BSE small cap index ended with gains of 2.81 per cent today.

Universal Cables, Repro India, Hindustan Constructions, Bombay Rayon Fashion, Flex Industries, Jindal Saw, Elgi Tyre and Bombay Dyeing were among the mid-cap gainers, all closing more than 10 per cent each higher.

Macmillan India, Astra Micro, Berger Paints, Max India, Shiva Texyarn, Hyderabad Industries and Sudarshan Chemicals were among the major mid-cap losers.

Mid-cap news flow

• Hinduja TMT and a privately held Hinduja group company has sold their entire 5.11 per cent stake in mobile telecom operator Hutchison Essar for $450 million to Hutchison Telecom. Hinduja TMT was holding a 4.68 per cent stake in Hutchison Essar.
  
  
• LKP Merchant Finance would sell its foreign exchange subsidiary, LKP Forex, to Thomas Cook. The sale would be subject to valuation of the business by independent consultants.
  
  
• United Western Bank has denied media reports that it would merge with a large PSU bank.
  
  
• Hitech Entertainment has said that its BPO subsidiary has won a new overseas order which could generate annual revenues of Rs22 crore.
  
  
• Prime Focus and a UK based company in which it is a strategic investor would jointly bid for a London based visual effects and animation company for an undisclosed amount.
  
  
• Shreyas Shipping has acquired a 14 year old container vessel with a capacity of 1,050 TEU.
  
  
• Stone India has appointed a Malaysian company as its agent to undertake turnkey railway coach upgradation and maintenance projects in Malaysia.
  
  
• Wyeth India has launched the vaccine Prevenar, a vaccine for active immunisation of children against diseases like meningitis. The company had reversed its earlier decision to forego the rights to this product in the Indian market in favour of the parent company after criticism from minority shareholders.
  
  
• Nucleus Software has implemented its retail finance software suites for Cholamandalam DBS, a leading NBFC and a JV between Murugappa group and DBS Bank of Singapore.
  
  
• Goldiam International has opened its first retail outlet for silver jewellery in Mumbai.
  
  
• Shareholders and creditors of Universal Cables have approved the merger of Optics Fibre Goa Limited with the company.
  
  
• The board of Revathi Equipment has approved a share buy back scheme at a price not exceeding Rs700 per share.
  

*Disclaimer: The author may have positions in some of the stocks specifically mentioned above at the time of writing this article. This analysis / report is only for the purpose of information and is not an investment advice. Readers are advised to consult a certified financial advisor before taking any investment decisions. While efforts have been made to ensure the accuracy of the information provided in the content the author or publisher shall not be held responsible for any loss caused to any person whatsoever.

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