Mumbai: Aggressive buying by funds on the eve of the general election results boosted the Bombay Stock Exchange benchmark Sensex by nearly 346 points at midsession on Friday as heavyweight stocks led by the banking sector recorded handsome gains.
The Sensex, which had been going down in the last three trading sessions, bounced back to gain 346.63 points at 12,219.54 at 2:30pm.
Similarly, the 50-share National Stock Exchange index Nifty shot up by 92.80 points at 3,686.25 at the same time.
The current rally was supported by shares in the banking, capital goods, teck and realty segments.
Shares rose 1.6% at noon, tracking strong Asian markets and as investors hoped one of the two major national coalitions would gain power after general election results on Saturday.
The market had fallen more than 2% over the past two sessions as investors worried a weak coalition would face hurdles to push reforms needed to boost slowing economic growth and cut a growing fiscal deficit.
But with dwindling prospects of a government that does not include either one of the two main national parties - the ruling Congress party and the opposition Bharatiya Janata Party - may have calmed investors, analysts said.
“No one knows who will win, not even the people who stood for elections, but people are being overly negative. Maybe the market has factored in the worst,” Gul Teckchandani, an independent investment strategist, said.
By 11:48am, the 30-share BSE index was up 1.8% and the 50-share NSE index was up 1.3%.
Private-sector lender ICICI Bank, energy giant Reliance Industries and engineering and construction firm Larsen & Toubro led the gains.
Strong markets across Asia following a rise on Wall Street overnight also helped, traders said. Japan’s Nikkei was up 1.9%, while MSCI’s measure of other Asian markets rose 2%.
“The focus is now definitely on global cues, as the market is discounting the possible election results,” R K Gupta, managing director of Taurus Mutual Fund, said.
The BSE index has rebounded about half from its March low, taking gains this year to around a quarter, following a pick up in global risk appetite.
Foreign funds have moved more than $1.8 billion into Indian stock so far this month, after net inflows of $1.5 billion in April.
Reliance Industries, which has the biggest weight in the main index, rose 1% to Rs1,927.90. ICICI Bank gained 3.4% to Rs555, while L&T climbed 2.9% to Rs973.90.
Oil & Natural Gas Corp fell 1.8% to Rs817, after the Economic Times said the state-run explorer could report a drop in 2008/09 profit as the federal government plans to ask it to bear a bigger subsidy burden to compensate state fuel retailers who sell fuel at state-set low prices.