Sensex Jumps by 468 points, Bank Nifty up 3% ahead of RBI policy …

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Benchmark as well as broader indices rallied 2 percent ahead of RBI policy review. Economists expect the central bank to keep policy rates unchanged. “Any small economic recovery could lead to inflationary pressures and to that extend monetary policy needs to remain restrictive,

The 30-share BSE Sensex surged 467.51 points to 24684.85 and the 50-share NSE Nifty rose 132.55 points to 7362.50, recouping last week’s losses. The optimism in market was also on account of some developments (from the finance ministry) in banking and insurance sectors. Finance ministry’s sources told CNBC-TV18 that it is working on creation of holding company for PSU banks’ recapitalisation . It may announce steps to check rising bad loans in budget, say sources. According to sources, there is a proposal to raise FDI cap in pharma and general insurance to 49 percent.

Stocks in action are BSE Capital Goods index hogged the limelight, rising 5 percent. Bank Nifty was up 3.2 percent while BSE Oil & Gas gained 2.9 percent followed by Power, Metal and Auto with 1-2 percent. However, defensives like healthcare and FMCG saw selling pressure. Larsen and Toubro was the top gainer in trade today, rising 6 percent to close at record high of Rs 1,645.40 on the BSE after reporting strong numbers in Q4. Net profit jumped 69 percent year-on-year.

Barclays has raised 12-month price target by 13 percent to Rs 1,813 while Deutsche Bank raised 12-month target price to Rs 1,905 a share. India’s largest lenders State Bank of India, ICICI Bank, HDFC Bank and Axis Bank gained 3-4 percent. Housing finance company HDFC was up over 2 percent. State-run oil & gas company ONGC surged 5.5 percent followed by top telecom operator Bharti Airtel with 5 percent. Tata Steel, GAIL, BHEL and Tata Power were up 2-4 percent. Maruti Suzuki jumped 2.5 percent after reporting superb numbers in May.

Total sales grew 19.2 percent to 1 lakh units compared to the year-ago period. Bajaj Auto and Hero Motocorp gained 1-1.5 percent post monthly sales numbers. However, ITC, TCS, Sun Pharma, Wipro, Dr Reddy’s Labs and NTPC were losers, down 0.4-1.3 percent. In the midcap space, Syndicate Bank, Central Bank of India, Cholamandalam, Max India (led by hopes of hike in FDI in insurance) and Suzlon Energy (post significant cut in losses in Q4) rallied 10-12 percent. Among smallcaps, Bombay Burmah, Uflex, NOCIL, Dhanlaxmi Bank and Atlanta were up 13-20 percent.

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