Mumbai: The Bombay Stock Exchange benchmark Sensex at midsession on Wednesday surged over 434 points to 15,561.11 - an almost one-year high - on aggressive buying by funds on expectations that the government would jack-up spending in the Budget to boost economic growth.
The Sensex, which gained significantly for the second straight day, shot up by 434.11 points, or 2.87%, to 15,561.11 at 1:00pm, matching a level last seen on 11 August last year.
The wide-based National Stock Exchange index Nifty shot up by 137 points, or 3.01%, to 4,687.95.
The capital goods, metal and banking segments were the major supporters to the rally
Shares rose 2.2% during noon as cash-flush investors boosted markets across Asia amid improving signs of a revival in the global economy.
“Central banks around the world have created an enormous amount of liquidity in the system, and this liquidity has to find room somewhere,” Subhajit Gupta, head of research at Reliance Equities, said.
“Money is finding its way into other assets classes such as commodities and also into emerging markets.”
Energy giant Reliance Industries and state-run explorer Oil and Natural Gas Corp climbed as oil prices raced toward $71 a barrel, a day after settling above $70 for the first time in seven months.
Diversified engineering and construction firm Larsen & Toubro gained on hopes it would win more orders as the government steps up spending on infrastructure.
Satyam Computer jumped 10% its maximum daily limit, for a second day after the fraud-tainted outsourcer released figures showing it stayed profitable.
By 11:40 am, the 30-share BSE index was up 2.2% at 15,459 points, after climbing to its highest close in 10 months in the previous session. The 50-share NSE index was up 2.2% at 4,649.75.
Twenty-seven of its components rose while in the broader section, gainers led losers by more than 1.5 to 1 on relatively moderate volume of 248.2 million shares.
Foreign fund inflows of almost $7 billion since mid-March have propelled the benchmark about 90% from a 2009 low on 6 March. Hopes of faster pace of economic growth in the latter half of the year, and investor-friendly reforms from the re-elected ruling coalition have also boosted sentiment.
Finance Minister Pranab Mukherjee is expected to present the 2009/10 budget on 3 July, an official said on Tuesday.
The market is up 60% this year, after slumping by more than half in 2008 as foreign funds pulled out about $13 billion.
“Compared to the rest of the world, India is doing pretty well. The market may look expensive, but once analysts revive their earnings per share forecasts on companies, that will change,” Gupta said.
Housing Development Finance Corp rose 2.2% to Rs2,408 after the top mortgage lender said it would raise up to Rs4,000 crore ($840 million) through a debenture-cum-warrant issue to institutional investors.
Reliance Industries, which has the most weight in the main index, advanced 2.2% to Rs2,322, while ONGC rose 3.9% to Rs1,175.35.
Larsen climbed 4.6% to Rs1,645.50 almost tripling in value since early March.
Satyam rose Rs6.65 to Rs73.50, while its owner Tech Mahindra jumped 9.8% to Rs817 after soaring more than a quarter on Tuesday.
Asian shares were higher on Wednesday, with Japan’s Nikkei up 2.1%, while MSCI’s measure of other Asian markets rose 2.7%.