Sensex snaps two-day fall, gains over 80 pts on duty cuts

Buoyed by cuts in excise duty, the Bombay Stock Exchange benchmark Sensex on Wednesday snapped a two-day falling trend by gaining over 80 points on fresh buying in blue-chips led by the auto sector.

The Sensex, which lost 2.4 per cent in the last two trading sessions, gained 80.50 points at 8,902.56, after touching the day's high of 8,995.04. Buying activity picked up on expectations that the government's decision to reduce direct and indirect taxes might boost industrial demand.

The 50-share National Stock Exchange index Nifty rose by 28.60 points at 2,762.50 and touched the day's high of 2,789.35 points. Trading volume remained restricted as the market, which was increasingly tracking global cues, adopted a cautious approach with the general elections approaching, brokers said.

The US Standard and Poor’s 500 Index jumped 4 per cent in New York, the most in a month, as the US Federal Reserve said there was a "reasonable prospect" the current recession will end this year.

They said shares of metal and auto firms rose on expectations that the excise and service duty cuts would boost sales, while banking stocks were firm on renewed hopes of an interest rate cut by the Reserve Bank soon.

Buying activity was partly supported as funds indulged in covering their pending positions ahead of tomorrow's expiry of derivatives. Reliance Industries, with the highest weight in the Sensex, contributed the most to the gains, mainly due to a rollover of derivatives positions. The stock rose 1.01 per cent to Rs 1,266.

The auto sector gained the most by rising 3 per cent to 2,622.38 as car-makers expected to pass on to consumers the gains from duty cuts. Car-maker Maruti Suzuki rose 3.2 per cent to Rs 662.75, Mahindra and Mahindra by 7.9 per cent to 318.40. Tata Motors, which cut prices on its trucks, rose 5.87 per cent to Rs 139.85.

The Information Technologies sector was the second-best performer, rising 2.52 per cent to 2,086.93, followed by the teck index, which went up 1.56 per cent to 1,739.95.  The metal index rose by 1.28 per cent to 4,642.64 after Hindalco Industries, an aluminum major, gained 2.43 per cent to Rs 40.05. Tata Steel, a largest maker of alloy, climbed 1.12 per cent to Rs 162.35. 

A firming trend in the overseas metal market also boosted trading in the metal sector. A measure of six primary metals raded in London advanced 1.9 per cent. Copper rose most in more than two weeks on the New York Mercantile Exchange, the biggest gain for a most-active contract since February 6. 

The oil and gas index rose 1.03 per cent to 6,087.30, the power index by 0.99 per cent to 1,740.45, the bank index by 0.86 per cent to 4,277.03, the PSU index by 0.86 per cent to 4,973.60, the healthcare index 0.76 per cent to 2,602, the FMCG index by 0.15 per cent to 2,015.90 and the consumer durable index by 0.03 per cent to1,576.07.

The smallcap index rose by 0.60 per cent to 3,134.69 and midcap index by 0.53 per cent to 2,756.98. However, the realty sector fell by 0.39 per cent to 1,447.29 and the capital goods index by 0.36 per cent to 5,902.84.