Banking stocks help Sensex close 276 points higher

The broader Nifty ended on top of 9,800 again.

Illustration: Uttam Ghosh/Rediff.com

A late surge in banking stocks, spurred by Cabinet decision on consolidation of public banks, pulled markets higher today as the Sensex closed up 276 points, in line with a firming global trend.

The broader Nifty ended on top of 9,800 again.

The government on Wednesday decided to set up an alternative mechanism to oversee proposals for consolidation of public sector banks (PSBs) with a view to creating fewer but stronger lenders.

State-run Punjab National Bank, Bank of Baroda, Allahabad Bank, Union Bank of India and Bank of India were at the centre of investors' attention, which recorded moderate to sizeable gains.

The 30-share Sensex stayed in the positive zone all throughout and hit a high of 31,593.39 before settling up 276.16 points, or 0.88 per cent, at 31,568.01. The gauge had gained 33 points on Tuesday.

The 50-share Nifty too rose 86.95 points, or 0.89 per cent, to close at 9,852.50 after scaling a high of 9,857.90. It hit a low of 9,786.75.

Infosys stock made a significant rally by climbing 1.98 per cent to Rs 894.50 on value-buying amid speculation that Nandan Nilekani might make a comeback as the company's head.

“The market suddenly spiked towards the last hour of trade, supported by renewed buying in beaten-down stocks.

Banking stocks grabbed investors' attention on account of the Cabinet nod to oversee PSU banks' consolidation," said Vinod Nair, Head of Research, Geojit Financial Services Ltd.

"Global market remains supportive ahead of Jackson Hole meeting Thursday which may hold the market direction in the absence of major domestic cues."

Adani Ports made it to the lead, surging 2.79 per cent at Rs 384.95, followed by Bharti Airtel.

Dr Reddy's went up for the second day, this time 2.25 per cent.

In the realty space, DLF Ltd climbed 6.10 per cent to Rs 186 on the news that it will hold a board meet on August 25 to decide on promoters' proposal to sell their 40 per cent stake in its rental arm to investment firm GIC in a deal estimated at around Rs 13,000 crore (Rs 130 billion).

There is a bit of short covering ahead of the expiry week, especially in infrastructure stocks, which suffered badly recently over the government action against shell companies.

Other big gainers were Tata Seel, Tata Motors, SBI, ICICI Bank, NTPC and Reliance Industries, rising up to 2.28 per cent.

The overall buying wave was so strong that most sectoral indices ended positive.

The BSE realty index jumped the most by rising 3.48 per cent, along with metal, banking and financials.

Strengthening global shares and uninterrupted buying by domestic investors kept the line clear for the upmove, traders said.

Revival of buying interest in the recently battered Infosys, banking and financial stocks too helped, they added.

Overnight gains at Wall Street amid growing optimism over a market-friendly US tax reform plan sparked the upmove in Asia and Europe.

Domestic institutional investors (DIIs) turned saviours lapping up shares net worth Rs 435.05 crore.

However, foreign portfolio investors (FPIs) sold shares worth a net Rs 828.69 crore on Tuesday, according to provisional data.

It was a good day for BSE mid-cap and small-cap indices, outpacing the benchmarks with a gain of 1.38 per cent and 1.21 per cent, respectively.