Bulls make a comeback on China stimulus hopes; Nifty tops 7,800

A strong rupee and broad-based buying across the counters in the beaten down bluechips aided the rally on the D-Street.

Markets finished on a robust note for the second straight session with Sensex surging over 800 points in two days after signs of stability in Chinese markets and the highest single day gains posted by Japan's Nikkei boosted investor sentiment.

Further, a strong rupee and broad-based buying across the counters led by index heavyweights aided the rally on the D-Street.

The Sensex soared 402 points higher to end at 25,720 and the Nifty surged 130 points to close at 7,819.

The broader markets ended in line with larger counterparts.

BSE Midcap and Smallcap indices gained nearly 2% each. The market breadth ended firm on the BSE with 1,969 gainers and 720 losers.

Market view

“The market bounced in the last two days, making 7540 as a crucial support from a short term view.

However, this recent rally is different in terms of stocks / sectors movements. Many key names from Metal Sector, Real Estate, Auto, Oil and Gas are suddenly looking attractive from a reversal perspective.

Some of these names are closer to breaking their 200 DMA as well, which is an extremely positive sign,” said Kunal Bothra, Head-Advisory, LKP Securities.

“For Nifty, however, I believe that there are two strong gaps which the index has to fill to stage a start of a strong uptrend, the first one is at 7950 and the major one is around 8050/8150 levels.

Till then all the rallies may appear to be just short lived and could induce selling pressure at the resistances I mentioned earlier,” he added.

Rupee was trading at 66.42 against the US dollar on increased selling of the dollars by exporters and banks amid strength in the local equities.

All sectoral indices closed in the positive territory with BSE Realty, Auto and Metal indices closing over 3% each.

Gold stocks

Jewellery shares glittered in today’s trade after the Cabinet approved gold bond and gold monetisation schemes to cut the metal's demand in physical form and stake out idle gold lying with households and other entities. Gitanjali Gems, Shree Ganesh Jewellery, Renaissance Jewellery, PC Jeweller and Rajesh Exports surged between 2-15%.

Telecom stocks

Shares of telecom services provider zoomed on reports that the Cabinet approved spectrum trading guidelines, which will permit telecom companies to buy and sell radio waves from each other.

Bharti Airtel, Reliance Communication and Idea Cellular surged between2-12%.

Metal stocks

Shares of metal companies have rallied by up to 8% on the bourses after LMEX, the gauge of six metals traded on the London Metal Exchange (LME), gained nearly 3%.

Vedanta rallied 8% to Rs 101 on the National Stock Exchange (NSE). Hindalco, Tata Sponge Iron and Bhushan Steel Tata Steel, JSW Steel, Vedanta and NMDC soared between 3-10%.

Among other stocks,M&M gained 2% higher on reports that the company's acquisition of Italian car designer Pininfarina may be completed in the next couple of weeks.

Banking shares ended higher for second straight day with Bank Nifty, the bank index. Axis Bank, Yes Bank, IndusInd Bank, Canara Bank, Union Bank of India and Punjab National Bank, Bank of India, Kotak Mahindra Bank, Federal Bank, Bank of Baroda, State Bank of India, ICICI Bank and HDFC Bank ended up between 1-4%.

Hindustan Unilever (HUL) ended with marginal gains after the company sold its bread and bakery business under the brand 'Modern' to Everstone Group.

Infosys and TCS surged between 0.4-3% after the U.S. Labour Department cleared information technology (IT) major of any wrongdoing and closed its investigation.

Global stocks

Asian equities ended higher on stimulus hopes after China imports plunged amid a strong rally in Wall Street that further buoyed the trading sentiments.

Meanwhile, Japan posted its biggest single day gains of 1,343 points or 7.7% in seven days which pushed the oil prices and dollar higher and Hang Seng index posted biggest one-day percentage gain of 4% since Dec. 1, 2011. Meanwhile, China’s Shanghai Composite gained over 2%.

The European stocks also gained following the strength in the global peers. FTSE 100, CAC 40 and DAX were up between 2-3%.