Sensex Cheers QE3, Diesel Hike; Closes 400 Points Up

The Indian markets zoomed to their highest levels in the last 8 months on positive domestic and global cues. The Sensex and Nifty closed with gains of 2.46% and 2.62% respectively. Nifty has closed above the crucial 5550 mark.

As mentioned in our previous update, the market sentiments were so positive that investors ignored the WPI data. The WPI figure for Aug 2012 increased to 7.55% against that of 6.87% for Jul. The much-awaited QE3 announcement by the Fed and the hike in the diesel price by the Indian government boosted investor sentiment.

All the sectoral indices ended in the green today. Among them, Realty, Bankex, and Metals zoomed up to close higher by nearly 4.75%, 4.06% and 3.92% respectively. Capital Goods, Auto, Oil & Gas, IT, PSU, Power CD and Tech have closed up in the range of 0.36%-3.43%.

The peer Asian markets also closed on a positive note, with Hang Seng, Nikkei and Shanghai higher by 2.8%, 1.79% and 0.63 respectively.

The European markets too have climbed to their highest levels in the last 14 months, with CAC, DAX and FTSE trading higher by 1.80%, 1.37% and 1.84% respectively. The Fed has said in its QE3 announcement that it would pump US$ 40 billion into the US economy each month until it saw a sustained upturn in the weak jobs market. It also pushed back expectations for when it would raise interest rates.

Dow Jones Futures is currently trading higher by 60 points or 0.44% at 13580, indicating a positive sentiment in the US markets.

Back home, realty and banking remained the major gainers. Realty stocks DLF, HDIL, Indiabulls Real Estate and Unitech closed with gains of 7.49%, 4.54%, 6.98% and 5.43% respectively. On the banking side, most of the stocks closed significantly higher. Stocks like Axis Bank, BOB, SBI, YES Bank, ICICI Bank and Kotak Mahindra Bank were up by nearly 5% each.

Of the major Sensex movers, Hindalco and Jindal Steel was leading with gains of 8% each. Others like Reliance Industries, Tata Steel and Maruti Suzuki all closed higher by nearly 4%.

The market breadth, which indicates the overall health of the market, remained very strong for the day. Out of the 3415 stocks traded on the BSE, 1733 advanced, 1539 declined and 143 were unchanged.

We expect the markets to remain positive on Monday as investors across the world would continue to cheer the positive global and domestic cues.