Markets gain second straight session

Benchmark share indices ended higher Thursday, amid a volatile trading session, led by banks after slump in food inflation to 4-year lows, rekindled hopes of rate cut by the central bank sooner than expected.

The 30-share Sensex ended at 15,813 up128 points or 0.82% and the 50-share Nifty ended at 4,734 up 41 points or 0.87%.

The Sensex and the Nifty reached an intra-day high of 15,835 levels and 4,741 mark, respectively.

The food inflation eased sharply to 1.8% in the year to December 10, from an annual 4.35% rise in the previous week, government data showed on Thursday.

Food inflation fell sharply to a near four-year low as prices of essential items like vegetables, onion, potato and wheat declined.

This is the lowest rate of food inflation since the week ended February 9, 2008, when it stood at 2.26%.

The fuel inflation remained unchanged at 15.24% in the latest week compared with the prior week, data showed, while the primary articles price index rose 3.78%, compared with an annual rise of 5.48% in the previous week.

On the global front, Asian markets ended lower after investors raised doubts over money borrowed by banks from ECB in the 3-year long term refinancing operation (LTRO)

Back home, all the sectoral indices ended in positive terrain except Technology and Telecom.

Firm opening of the European markets during late noon trades further boosted sentiment amongst local investors. The CAC-40, DAX and FTSE-100 were up by nearly 1% each.

BSE Bankex surged almost 2%. ICICI Bank, SBI and HDFC Bank witnessed significant buying demand, zooming nearly 3% to Rs 702, Rs 1,623 and Rs 435, respectively.

Among other financial shares, HDFC Bank surged 1%.

FMCG shares gained on expectation that sharp fall in food inflation would result in higher purchasing power of consumers.

Hindustan Unilever ended up 1.9% at 408.75 after touching a life-time high of 414.40 in intra-day

trades. ITC gained 0.8% to end at 203.75.

BSE Realty index spurted by nearly 2%. DLF topped the buyers list in Sensex 30 stocks, zooming by over 5%.

In the auto stocks, Tata Motors was up 4%; Maruti Suzuki gained by 1%. Hero Motocorp and M&M were marginally higher.

Index heavyweight RIL and ONGC gained between 1-1.5%.

However, Technology shares remained under pressure after weak earnings reported by US-based software major Oracle on Tuesday. Software majors Infosys and TCS tumbled by nearly 1% each.  Wipro was down over 2.5% each.

Among the laggards, Bharti Airtel ended down 1.8% on reports that the telecom ministry has asked service providers to discontinue their 3G roaming agreements, which will lead to a significant loss of revenues to the government.

In the broader market, the mid-cap and small-cap indices ended 1% higher.

Amongst other shares, Public sector undertakings such as State Trading Corporation (STC), Hindustan Copper, Dredging Corporation, NMDC and MMTC rallied more than 5% each on reports that the government plans to borrow as much as Rs 50,000 crore using land and shares as collateral to bridge the budget deficit.

Mahindra Holidays surged by 5% at Rs 285 after it announced the launch of Club Mahindra Emerald Palms in Goa.

Amrit Bansapati Company and Amrit Corp rallied more than 5% each after Bunge, the world's leading oilseeds processor, entered into an agreement to acquire the edible oils and fats business of Amrit Banaspati.

SKS Microfinance was locked in 5% upper circuit ever since the market regulator SEBI approved increase of FII investment limit in the company to 74% from 24% earlier.

Sugar stock like Bajaj Hindusthan was up by 7%. Balrampur Chini and Shree Renuka Sugars gained 5% each. Food Minister is in talks with Finance Ministry on partial decontrol of sugar.

The broader market breadth ended weak with 1,509 stocks advancing and 1189 shares declining.