Sensex closes above 19K, heavyweights rally

Markets advanced 2% following firm global cues, sustained investment by foreign institutional investors and rally in heavyweight Reliance Industries.

After grinding lower for three consecutive sessions, Nifty opened in the green and moved higher led by gains in frontline stocks-Larsen & Tourbo, ITC,  RIL and Infosys. The index managed to hold on to the gains and touched a high of 5,737 in the last leg of the trade.

Finally, the S&P CNX Nifty closed at 5,729, up 104 points and the Sensex ended at 19,078, up 351 points. The benchmark Sensex last crossed 19K on April 29.

Foreign Institutional Investors have pumped in $2.2 billion or Rs 9807 crore in Indian equities in the past eight trading sessions.

Food inflation for the week ended June 25 eased to seven week low, at 7.6% compared to 7.8% in the previous week which also supported the upbeat sentiment.

While the inflation has eased, there are expectations that some amount of weakness may persist in the market going forward because profitability on India Inc. may remain under pressure in the first quarter of FY12 due to surge in input costs, moderation in volume growth and rising competition.CRISIL in a in a research note said,  "EBITDA margins would decline by 200 basis points due to higher raw material prices and wages, but revenues are expected to grow by 23% based on aggregate analysis of companies selected from 23 industries."

Among individual stocks Sun TV slipped 2.6% and Spice Jet declined 0.4% after textile minister Dayanidhi Maran

resigned from the Union Cabinet. The Central Bureau of Investigation alleged that Maran coerced Aircel promoter to sell its stake to Malaysian based Maxis Communication in return of a favour. This is the second minister to resign this week after corporate affairs minister Murli Deora offered to quit earlier this week.

SKS Microfinance was locked in upper circuit after it jumped 20%, to Rs 411 after Reserve Bank of India released a draft bill to develop and regulate microfinance industry. SKS Microfinance stock was dumped by investors earlier in the year for overcharging and using forceful practices to recover money from the lenders.

Reliance Industries added 2.1%, to Rs 870 after source from Oil Ministry said that next it will approve the $7.6 billion deal between RIL and BP Plc.

Markets across Asia eked out gains, shrugging off deposit and lending rate hike of 25 bps in China. The Shanghai Composite Index rose 0.2%, Hong Kong's Hang Seng Index added 0.7%, and Japan's Nikkei Stock Average edged down 0.1%.

Back in India, Among the sectoral pack, BSE FMCG Index was the top gainer. Marico rallied 7%, ITC advanced 3.3% and Hindustan Unilever gained 1.8%.

BSE Realty index ended on firm ground, up 2.3%. DB Realty surged 8%, Anant Raj Industries advanced 7% and Peninsula Land gained 3.5%.

Top gainers on Sensex were Bharti Airtel, up 3.9%, Hindalco rallied 3.6% and ITC was up 3.3%. Sterlite was the only stock which ended in the red, down 0.7%.

From the broader markets midcap and the smallcap indices gained 1.1% each.

Market breadth was positive, 1898 stocks advanced for 968 stocks which declined.