Sensex Closes Almost 200 Points Higher

The Sensex today closed at a 21-month high, at 19065.38 having risen by 1.04% or 195.69. The Nifty closed the day at 5787.60, higher by 56.35 points or 0.98%. This upward move was seen as a result of positivity created on the back of expectations of reforms to be announced post the Cabinet meet scheduled at 16:30 today. Global cues too were supportive of a bull run in the trading session.

The global markets have been seeing a upwards move ahead of policy decisions to be taken by three central banks – the European Central Bank, Bank of England and Bank of Japan. Rate cuts are expected to take place in these three regions after the markets saw an unexpected cut in interest rates by the Reserve Bank of Australia on Oct 2, 2012.

Moreover, employment data from the US is due tomorrow, and the preliminary data is indicative of an addition in payrolls. According to Bloomberg estimates, employers added 115000 workers to the payrolls in Sept as compared to 96000 in Aug.

High expectations from the US employment data, coupled with expectations on the monetary policy front, had the European markets inching upwards as well. The FTSE 100, DAX 30 and CAC 40 are currently trading higher by 0.22%, 0.29% and 0.26% respectively. At the same time, Spanish government bond yields were auctioned today, and the nation sold 3.99 billion Euros worth of of securities at a higher yield and lower price.

On the Asian front, the Hang Seng closed flat, up by 0.09% and the Nikkei was higher by 0.89%, while Shanghai remained shut on account of holidays.

On the domestic front, the real estate sector saw a major upswing today due to rising hopes of an interest rate cut and an expected rise in demand on account of the festive season. The Realty index soared by as much as 4.94%. To support the demand, banks cut home loan rates by 25 basis points and developers added to their free offerings. Among other gainers were Consumer Durables and Banking stocks. 3 of the 13 sectors ended the day negative. Auto, IT and Healthcare declined in the range of 0.08%-0.92%. IT stocks have been seeing consistent selling due to the strengthening rupee.

Speaking of the rupee, the likely announcement of reforms sent the currency even higher today. During the day, it was seen breaching the crucial level of 52 to the dollar. This has been negatively affecting the Indian IT sector. The export-dependent sector saw a downfall of 0.28% today. TCS and Infosys ended the day lower by 0.50% and 0.12% respectively. TCS was relatively lower due to the downward pressure added by the downgrade by HSBC.

Oil India (OIL) and Indian Oil Corporation (IOC) announced that they have jointly bought a 30% stake in Carrizo Oil & Gas’s Niobrara shale asset in Colorado for USD 82.5 million. While OIL would take a 20% stake, IOC would buy a 10% stake, and this sent their stock prices higher by 1.52% and 2.90% respectively.

It has been a positive day for the markets, and tomorrow’s moves would be based on the results of the Cabinet meeting that would be out in the public domain by 18:30 today. These are expected to be positive, and the markets are hoped to remain upward-bound tomorrow too.