Post Market-10th Dec'08

Nifty crosses crucial 2850 level; short-term rally on cards

The euphoria of RBI's measures to infuse more liquidity and the government's over Rs 30,000-crore package for the industry over the weekend was revived Wednesday when the market resumed trade after a festive holiday.

Strong cues from Asian counterparts also aided the upmove. After a firm opening, trade on the Indian bourses turned lacklustre for a brief period and again gathered momentum triggered by the news that a tentative deal was reached on a plan to rescue the battered US auto industry.

The auto industry's Big Three appear close to securing a bailout, with reports that the White House and top Democrats have agreed in-principle for a $15 billion rescue plan - less than half the amount sought by GM, Ford and Chrysler.

"After a long period of consolidation, key indices were ripe for a breakout. The government's stimulus package and RBI's move over the weekend proved to be the catalysts for this rally. These measures were not fully absorbed on Monday where we witnessed some amount of profit booking in late trade ahead of the market holiday on Tuesday. Hence , the rally resumed Wednesday . Global cues were also in favour of an upmove," said DD Sharma, vice president-equity at Anand Rathi Securities.

Bombay Stock Exchange's Sensex rose 5.37 per cent or 492.28 points to close at 9,654.90 after touching a high of 9,678.70. The low was 9,280.16. National Stock Exchange's Nifty climbed 5.18 per cent or 144.25 points to 2928.25.

Having crossed important resistance level of 2850, Sharma said the market now looks poised for a short term rally which could see the index go up to 3150-3200. He observed that with index pivotals like Reliance Industries and IDFC crossing their 20DMA, there is a high probability of a stronger rally.

The broader market also participated in late trade. BSE Midcap Index closed 2.19 per cent and BSE Smallcap Index gained 1.56 per cent.

DLF was the star of today 's rally . The stock ended 18.93 per cent higher sending the BSE Realty Index up 12.56 per cent on expectations that the RBI measure including a refinance facility for the National Housing Bank and priority sector status for housing loans up to Rs 20 lakh will revive housing demand.

Biggest Sensex gainers were DLF (18.93%), Mahindra & Mahindra (15.47%), Grasim Industries (13.66%), Tata Steel (10.92%) and Reliance Communications (10.24%).

Index heavyweight Reliance Industries jumped 9.6 per cent to Rs 1,227.20, its biggest gain since Oct. 31 taking it to its highest close in a month, with foreign funds leading the buying. The rate cuts also bolstered bank stocks, with No.2 lender ICICI Bank rising 8.2 pe rcent and top mortgage lender HDFC climbing 7.5 percent.

Ranbaxy Laboratories, down 1.08 per cent, was the only laggard in the 30-share index.

Market breadth on BSE remained positive with 1,138 advances against 774 declines.

via:E.T