Bull Charge Continues; Nifty Nears 5000

Bull Charge Continues; Nifty Nears 5000
Surya R Kannoth, Mumbai
The Economic Times

Bulls resumed their charge for the second straight session Wednesday sending equity benchmarks to nearly 16-month highs. Expectations of a strong earnings season along with encouraging comments from Fed Chairman about the US economy kept investor sentiment upbeat. Commodity stocks clocked handsome gains making the BSE Metal Index the biggest sectoral gainer.

On Tuesday, US Federal Reserve Chairman Bernanke said the country's recession was "very likely" at an end. Bernanke said there was general agreement among economists that the US would return to growth in the third quarter of this year and continue to pick up in 2010. But he said any recovery would be slower than in previous economic crises, which means unemployment will also be slow to fall. The US jobless rate climbed to 9.7 percent in August, its highest level in 26 years. This spurred stocks across the world.

“The trend continues to remain up and very strong as markets are lacking any huge selling from the FIIs or the domestic players. We were looking for a fresh trigger and one of the triggers is the advance tax numbers and the second could be the earnings estimates for this quarter in the coming days. To add to the good news, Bernanke declared that US recession is very likely over. Banking, metal and auto stocks continue to show strong resilience. The next target for the Nifty is 5100,” said a technical analyst with a domestic brokerage.

Bombay Stock Exchange’s Sensex settled at 16,677.04, higher by 1.35 percent or 222.59 points from the previous close. The index touched a high of 16,700.56 and low of 16,498.59 during the day.

National Stock Exchange’s Nifty moved closer to its next immediate target of 5000. The index ended at 4958.40, up 1.36 percent or 66.3 points. The index surged to a high of 4966.30 after opening at 4894.65.

Broader markets performed in line with bluechips. The BSE Midcap Index climbed 1.45 percent and BSE Smallcap Index rose 1.1 percent.

Hotel stocks were also buzzing with action after the Reserve Bank of India notified that hotel ventures run by the entrepreneurs themselves be taken out of the real estate exposure for banks so that they become eligible for loans on the lines of infrastructure projects. This new relaxation would enable hotels to avail larger credits at better interest rates, which would help to lower the overall cost of such hotel projects. Shares of Kamat Hotels surged 20 percent, EIH Hotels climbed 19 percent and Royal Orchid advanced 12.64 percent.

GAIL (-2.28 percent), Reliance Infrastructure (-1.21 percent), BPCL (-1.06 percent), Hindustan Unilever (-1 percent) and Wipro (-0.82 percent) were the losers.