High temperature! Sensex up 506 pts, Nifty ends above 8150

Moneycontrol Bureau

Temperature rose in equity market on a sultry Friday driven by short coverings and strong global cues. After getting bruised for past few days, the Sensex rallied 506.28 points or 1.9 percent at 27105.3. The Nifty ended up 134.20 points or 1.7 percent at 8191.50. About 1875 shares advanced, 822 shares declined, and 172 shares were unchanged.

Sunil Garg, JPMorgan feels that Nifty support must come in at 7500 but there can be downside risks to 6800. According to him, the FY16 earnings too have a downside estimates. However, the long-term structural story for India remains intact, he added.

However, Moody's outlook further boosted the market sentiment. According to it India's credit rating is unlikely to be impacted by the recently strong foreign investor sales of shares and bonds over concerns about a tax on overseas funds, despite the uncertainty being created over the country's tax regime.

Banks, auto and capital goods fueled the fire today. Tata Motors (up 5 percent) remained top gainer of the day as the auto major raised Rs 9040 crore through rights issue that was oversubscribed by 1.21 times.

ICICI Bank, Cipla and Hindalco were other top gainers in the Sensex. HUL, too, gained over 3 percent on its 6 percent volume growth in March quarter. The FMCG's Q4 profit rose 16.7 percent year-on-year to Rs 1018 crore.

On the losing side were Hero Motocorp (down 2 percent) as it reported second straight disappointing quarter. ONGC, TCS, Tata Steel and NTPC were other laggards in the Sensex.

Both Midcap and Smallcap indices closed up 1.7 percent from previous close. HDIL, Chennai Petroleum, Amtek Auto, Texmaco Rail and Symphony were top gainers among the midcap stocks.

Meanwhile, government bonds dropped to their lowest level in nearly five months as investors sold debt after the cut-off yields at an auction came in above market expectations, suggesting investor appetite for debt was low.

Bond yields have risen 22 basis points over the last two weeks, gaining in line with global debt market yields. The weaker rupee and foreign fund outflows from the domestic share and debt markets have also been hurting.

The Reserve Bank of India sold the new 15-year paper at 7.88 percent. All other bond cut-offs also came in above market expectations.

On the global market front, world bond and stock markets rose after a bruising week and sterling jumped to a two-month high after the business-friendly Conservative party won Britain's national elections. Sterling was up 1.4 percent against the dollar and London's FTSE led equity markets with a 1.5 percent surge to help European shares rebound from two-month lows and wipe out what had looked like being a second week of losses.

Confidence was also given a big lift as bond markets recovered after one of the most turbulent weeks in Europe for decades. The bond stabilisation helped investors cast off their normal caution ahead of monthly US non-farm payroll jobs data and its implications for when the Federal Reserve raises interest rates.