Mumbai The Bombay Stock Exchange bellwether index Sensex skyrocketed by a hefty 539 points to close at a more-than two months high of 17,231.11 on frenzied short-covering across the board and fresh buying in metals and energy stocks, ahead of the long weekend coupled with the expiry of the derivatives contracts on December 31.
The 30-share Bombay Stock Exchange barometer opened marginally higher but soon gathered steam and kept rising across the day and finally to shut the shop at 17,231.11 points, a level not seen since October 17, netting a massive gain of 539.11 points or 3.23 per cent.
Firm overseas trend, higher advance tax payments by Indian Inc and positive comments by the Finance Minister on economic growth too fuelled the strong rally, especially on the metal counters which remained the hottest pick for the third successive day.
The broader 50-share Nifty of the National Stock Exchange too soared by 158.75 points or 3.18 per cent—the highest single day gain since May 27, 2009--to close at 5,144.60 from the last close.
The humongous rally took both the marketmen and analysts surprised. Geojit BNP Paribas Financial Services research head Alex Mathew said “today`s market movement was quite surprising. Good US economic data dropped hints of a recovery in the global market which lifted market sentiment.
"Another reason for the surprise rally was the Finance Minister`s statement that the stimulus would continue till the next fiscal and that the economy would grow around eight per cent this fiscal, which helped to hold up the sentiment throughout the day.
The massive rally even surprised the marketmen, who said that funds`, which are already in holiday mood, buying spree was quite surprising.
Brokers said the strong surge was aided by the short-coverings as the markets will remain closed on December 25 for Christmas and on December 28 for Moharram and again on January 1, 2010 on account of the new year. December 31 is the last day of the derivatives contract,forcing operators to wind up their short positions.
There was all round buying across the counters in the later part of the day as domestic institutional investors too stepped in to support the market, that was under long dry spell till yesterday.
Wednesday`s rise of the Sensex was the highest since May 18, 2009 when the market was shot up by a record 2,110.79 points as the Congress-led UPA government came to power with a clear majority.
Finance Minister Pranab Mukherjee today said the economy could grow by 7.5 to 8 per cent during the current fiscal, making the market sing the new year jingles before a week.
Asian indices too ended higher by about 0.35 per cent and 1.91 per cent on better-than-expected existing home sales data in the US while the European markets too showed a firm trend in their morning trade. The CAC was up by 0.65 per cent, the DAX by 0.57 per cent and the FTSE by 0.71 per cent.
The counters that led the rally following heavy buying support were the metals, refinery, power, capital goods and IT
The rally was so strong that all the 30-share Sensex counters ended with sharp to moderate gains while all sectoral indices too finished higher by about 4.05 per cent and 0.79 per cent.
Geojit`s Mathew said, "there was all round buying across the counter in the later part of the day as domestic institutional investors stepped in to support the market.
However, the Sensex upside is capped between 17,352 and 17,361. So such kind of a momentum is not expected tomorrow."
None of the 30-share Sensex stocks closed in the red.