Banks, metals, oil & gas, infra drive Sensex 218 points higher

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Equity benchmarks rallied for the second consecutive day on Wednesday, with the Sensex surging more than 200 points on the back of support from 26 out of 30 stocks including major heavyweights like Reliance Industries, ICICI Bank, Infosys and BHEL.

Aditya Narain of Citi expects to see further upside in the market with their Sensex target for December at 22,000 with a more aggressive portfolio/market mix, moderately better macro situation, slightly higher valuations and a bias towards large caps over midcaps.

"India has actually outperformed most equity indices over 2008 and it is currently a cheaper and more defensive market than in its heyday," he said.

The 30-share BSE Sensex gained 217.86 points or 1.21%, to close at 18,206.16 and the 50-share NSE Nifty went up 66.40 points or 1.23%, to settle at 5480.25.

Ashu Madan of Religare Securities feels that everything is factored in - all types of geo-political tensions or high interest rate regime, high inflation. "So below 5200 or 5300, it certainly doesn't look like. But having said that, obviously there is an upside band which is capped, which is 5600 band whenever it reaches there some amount of selling happens."

On the global front, European markets were quite a bit of supportive - France's CAC, Germany's DAX and Britain's FTSE were up 0.3-0.5%, at the time of closing of Indian equities. Asian markets were mixed in trade; Shanghai gained 1% while Nikkei 225 Average fell 1.65%.

All sectoral indices ended in green today. The BSE Realty, Bank, Healthcare, Metal, Oil & Gas, Capital Goods, FMCG, Power and IT indices moved up 1-2%.

India's second largest lender ICICI Bank was among the top five gainers, with rising 3.66% followed by PNB, Kotak Mahindra Bank and Axis Bank, with 1.5-3% gain. SBI and HDFC Bank went up over 0.5%.

Heavyweight Reliance Industries, Infosys, BHEL, Bharti Airtel and ITC were up 1-2.5%. ONGC, NTPC and L&T closed with moderate gains.

Sesa Goa was the top gainer on Nifty, with climbing 4.5%. Sterlite, Hindalco, Tata Steel and SAIL moved up 1-2%. Cipla surged over 4% while TCS, M&M, JSPL, Siemens, Bajaj Auto and Reliance Capital were only losers on Nifty.

The BSE Midcap and Smallcap indices gained 0.6-0.9%. In midcap space, Deccan Chronicle, Glodyne Tech, HOEC, State Bank of Bikaner and Prestige Estate surged 9-16% whereas Shree Global, Sunteck Realty, KGN Industries, Dewan Housing and Peninsula Land fell 4-7%.

In smallcap space, Dion Global, Zee Learn, AP Paper Mills, India Glycols and Rollatainers were up 11-20%. However, Asian Hotel (E), Asian Hotel (W), Kanani Industries, Bhansali Engg and Bheema Cements slipped 5-10%.

However, experts believe that crude oil remains a big concern for Indian market as London Brent crude was hovering around USD 116 a barrel and NYMEX crude future was holding the USD 105 a barrel, reacting to geo-political tensions in Middle East & North Africa.

Alroy Lobo, Chief Strategist & Global Head- Equity Asset Management, Kotak AMC said crude oil prices continued to be a dominant factor affecting market sentiment.

"If oil prices go below USD 100 a barrel, India will be positively viewed." Global newsflow, from Japan to the Middle East has also been factored in by the market, he adds. "Given where valuations are, you could see perhaps maybe 5-8% downside to the market."

There was more protest in Yemen and Syria on Tuesday, and renewed tension at the Israel-Gaza border.

Yemen's president said his country would descend into civil war if he were forced to quit and Washington voiced concern about instability in the Arab state, from where al Qaeda has attempted to launch attacks on Saudi Arabia.

"The market is still very vulnerable to further disruptions to supply," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments. "People are quite nervous about the current turmoil spreading to Saudi Arabia."

(With inputs from Reuters)