Sensex rebounds by 180 pts to two-year high on rate cut hopes

The BSE benchmark Sensex today bounced back by jumping nearly 180 points to close at two-year high level of 20,103.53 on heavy buying in interest-sensitive stocks ahead of RBI credit policy next week and better than expected earnings by Maruti Suzuki.

After falling by 103 points yesterday, Sensex today rose by 179.75 points, or 0.90 per cent to end at 20,103.53 helped by Tata Motors, Maruti, SBI, L&T and HDFC Bank shares.

Indications of recovery in the global economy, mainly in the US, China and Europe, also helped sentiment, dealers said. Rate-sensitive real estate, auto, consumer durables, capital goods and banks saw good buying on hopes at least 0.25 per cent cut in rates on January 29 to boost economic growth.

Buying was strong with all 13 sectoral indices closing with gains of up to 4.42 per cent. Similarly, the 50-share NSE index Nifty rose by 55.30 points, or 0.92 per cent to close at 6,074.65.

"Constant liquidity in the market is holding the indices in upward zone, i.e., Nifty above 6,000 and Sensex over 20,000. Also, rate cut hopes are high this time," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio Ltd.

Maruti Suzuki rose by 4.15 per cent, the best performer among 30-scrip Sensex today, as it reported over two-fold surge in Q3 net profit at Rs 501.29 crore. "Maruti's profit jumped by 144 per cent YoY ahead of consensus on account of higher EBITDA and other income," said Daljeet S Kohli, Head Research, IndiaNivesh Securities.

Tata Motors, the owner of Jaguar Land Rover, also shot up by 2.55 per cent to Rs 301.05 on value buying by investors. Among banks, State Bank of India shot up by 2.23 per cent to Rs 2,513.25, ICICI Bank by 0.76 per cent to Rs 1,172.75, Bank of Baroda by 4.71 per cent to Rs 880.70 and Bank of India by 4.70 per cent to Rs 364.40.

In realty space, DLF, Unitech India Bulls Realestate and Sobha Developers closed with gains on expectations that a rate cut would boost home loan business.

Metal shares like Jindal Steel, Sterlite Ind, Hindalco and Tata Steel ended higher with gains.

Recently battered second-line stocks also were in the limelight on good buying support from retail investors, said market experts. HDIL, which tanked over 38 per cent on the last 4 days, jumped by nearly 11 per cent today.

Globally, most Asian stocks closed lower while Japanese stocks finished with sharp gains, boosted by fresh multi-year lows for the yen. Singapore shares also ended better. However, European markets were quoting higher in the afternoon trade. The DAX was up by 1 per cent, the CAC by 0.37 per cent and the FTSE by 0.09 per cent.

Back home, 23 scrips out of the Sensex pack finished with gains while the remaining seven declined. Among other major gainers from Sensex were Sun Pharma (2.62 pc), Cipla (1.37 pc), ONGC (1.40 pc), L&T (1.37 pc), HUL (1.37 pc), Gail India (1.29 pc) and Dr Reddy's Lab (1.02 pc).

Among losers, Tata Power dropped by 1.03 per cent and CIL by 0.73 per cent. RIL and HDFC also lost 0.27 per cent each.

In the sectoral indices, the BSE-Realty rose by 4.42  per cent, followed by BSE-Auto (2.19 pc), BSE-CD (1.71 pc), BSE-Metal (1.56 pc), BSE-HC (1.50 pc), BSE-CG (1.34 pc), BSE-PSU (1.24 pc) and BSE-Bankex (1.17 pc).

Market breadth turned positive as 1,663 stocks ended higher while 1,214 scrips finished lower. Total market turnover dropped to Rs 2,363.58 crore from Rs 2,565.55 crore yesterday.

Meanwhile, Foreign Institutional Investors (FIIs) bought shares worth Rs 1,026.31 crore yesterday, as per provisional data from the stock exchanges.