Sensex ends highest in 1-1/2 months, HUL surges
The BSE Sensex closed at its highest in 1-1/2 months on Tuesday, led by gains in Hindustan Unilever after its parent made a $5.4 billion offer to raise stake in it, while the finance minister's comments that tax residency certificate is enough proof of residency for tax purposes also helped.
The gains also tracked advances in European share markets as some investors positioned for the European Central Bank and the US Federal Reserve to extend their monetary measures to stimulate economic growth.
The RBI's policy review and its stance on future rate cuts, especially after the recent slump in commodity prices, are important for the near-term direction of the market, with many analysts saying that a 25 basis point cut seems already discounted at current valuations.
Citigroup said in a report that some investors in Europe referred to India as a 'tease' market, which is on the radar once again due to lower commodity prices, expansionary global monetary conditions and prospects of a good monsoon.
"RBI decision and direction, headroom of future rate cuts is all important now," said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance, who oversees Rs 4,000 crore worth of investments in the capital market.
A 25 basis point cut is mostly discounted after the recent rally, Mr Srivasatava added.
The benchmark BSE index rose 0.6 per cent, or 116.68 points, to end at 19,504.18, gaining for the first month in three with a 3.5 per cent rise in April.
The broader NSE index rose 0.44 per cent, or 26.10 points, to end at 5,930.20, closing above the psychologically important 5,900 level, gaining 4.4 per cent for April.
The markets will be closed on Wednesday.
Finance Minister P. Chidambaram's clarification that a tax residency certificate issued by a foreign government would be an accepted proof of residency for tax purposes also helped the stocks, dealers said.
Hindustan Unilever shares rose 17.4 per cent to mark their all-time highest close after Anglo-Dutch consumer goods giant Unilever Plc offered to pay as much as $5.4 billion to raise its stake in its Indian unit.
Other FMCG stocks also saw a rub-off of Unilever's open offer. Colgate-Palmolive India rose 5.8 per cent and ITC ended 1.3 per cent higher.
Shares in Dabur India rose 0.8 per cent after its January-March net profit rose about 17 per cent to Rs 201 crore.
Sterlite Industries (India) rose 4.2 per cent after its January-March profit beat consensus estimates by a wide margin.
Jet Airways shares gained 2 per cent a day after a founder group company of the carrier said it would sell a stake as part of public float rules.
However, among stocks that fell, lenders like HDFC Bank fell 1.9 per cent on caution ahead of the RBI policy review on May 3.
Shares in IDFC fell 2.5 per cent a day ahead of its January-March earnings results.
Copyright @ Thomson Reuters 2013
