Nifty at 19-month high, Sensex rallies 329 pts

Moneycontrol Bureau

The Sensex and Nifty vaulted to their highest levels in 22 months and 19 months respectively amid record trading turnover on Thursday, as buyers chased auto, banking, realty and capital goods shares. Click here for sectoral gainers

The Sensex closed at 19170.91, up 328.83 points or 1.75% over its previous close, and the Nifty closed at 5825.00, up 97.55 points or 1.70%. This is the second consecutive session of 300-plus-point gain for the Sensex. Click here for full chart

Brokers attributed the surge to a combination of short covering in the derivatives segment and sentiment-driven purchases following positive comments from global players like ratings agency Moody’s and investment bank Goldman Sachs, in the last couple of days.

Also Read: Dec series: Angel Broking sees Nifty's resistance at 6000

We forecast India’s GDP growth to accelerate from 5.4% in 2012 to 7.2% in 2014, and remain high through 2015-2016,” said a Goldman Sachs strategy note, citing declining oil prices, favorable external demand outlook and domestic structural reforms as the key triggers. Full article

Nifty December futures closed at 5871.40, a premium of 36.40 points to spot, reflecting the bullish near term outlook on the market.

Combined traded turnover on both exchanges combined was a record 3.4 lakh crore, which is more than the market capitalization of SBI, HDFC and ICICI Bank put together. Click here for turnover

ICICI Bank, Tata Motors, Bajaj Auto, Larsen & Toubro, HDFC, and HDFC Bank led gainers in the Sensex, climbing 3-5%. Click here for top gainers

With today's gain, the Sensex has rallied over 600 points in the last couple of trading sessions.

Indiabulls Financial Services, Suzlon, Unitech, Opto Circuit, and IRB Infra were the star performer among midcaps, rallying 6-9%. Click here for Midcap gainers

But there are enough skeptics who feel the market may struggle to sustain at higher levels, as investors appear to be ignoring deeper problems like tepid corporate earnings growth and worsening macro-economic indicators.

While second quarter earnings were just about in line with market estimates, the majority view is that it could be a while before analysts start upgrading their earnings estimates.

High inflation and widening current account and fiscal deficits pose a major risk to sovereign rating even though some rating agencies like Moody’s may have assigned a ‘stable’ outlook on the rating.

"We maintain our view that as the UPA government is currently in a 'minority', there will be parliamentary uncertainty and challenges. We expect these reforms will take time to have an impact and maintain our growth estimates of 5.4% in FY13 and 6.2% in FY14," brokerage house Citi has mentioned in its latest strategy report.