Jonathan Garner of Morgan Stanley believes that the emerging markets are discounting a recession scenario at the moment. In his opinion, allowing the European stability mechanism and direct recapitalization of banks are seen as positive developments. Garner expects 20-40% returns from the Indian equity market in the next six months.
The BSE benchmark rose 384.42 points or 2.26% to 17,375.18 and the NSE benchmark was up 113.70 points or 2.21% at 5,262.85.
Engineering and construction major by sales Larsen & Toubro, steel and power producer JSPL, state-owned power equipment manufacturer, private power producer Tata Power and top car maker Maruti Suzuki topped the buying list, rising 4-5%.
Stocks hit 52 week high - ITC rallied 3% and Vakrangee Software gained 2.7%.
Country's largest private sector lender ICICI Bank was up nearly 4% while its rivals State Bank of India and HDFC Bank gained 2.4% each.
Shares of Reliance Industries, India's most valued stock rose 2%. Software services exporters TCS and Infosys were up over 1.5%.
Among metals and mining stocks, Sterlite Industries and Hindalco shot up 3.5% each. Tata Steel went up 2% and Coal India was up 1%.
Auto stocks like Hero Motocorp, Tata Motors, Bajaj Auto and Mahindra & Mahindra 1-3%.
However, Cairn India tanked nearly 6% after sources said Cairn Energy PLC sold more than 6 crore equity shares of Indian unit. State-owned oil marketing company BPCL fell nearly 1% after these companies cut petrol prices by Rs 2.46 a litre.
The Indian rupee gained 52 paise to trade at 56.28 against the US dollar. Euro was the single currency that gainedmore than 1% to 1.26 against the US dollar on Friday after euro zone leaders agreed a deal to stabilise the region's debt markets and recapitalise its banks, easing the funding strains on Spain and Italy.
The deal caught markets by surprise, sending safe-haven German bonds and the dollar lower, while prices for gold, oil and copper rose by 1-2%. Ten-year Spanish and Italian bond yields fell to 6.44% and 5.84%, respectively. France's CAC and Germany's DAX shot up 2.4% each while Britain's FTSE was up 1.1%.
(With inputs from Reuters)
At 12:40 hours IST: Sensex at 2-month high; European mkts strong on EU pledge
The BSE Sensex and NSE Nifty maintained early gains quite smartly in the afternoon trade as European markets like France's CAC, Germany's DAX and Britain's FTSE opened 1.5-3% higher after European Union, at its summit, reaffirmed its commitment to use its bailout funds flexibly.
Indian equities were trading at two-month high - The BSE benchmark climbed 369.85 points or 2.18% to 17,360.61 and the NSE benchmark rose 112 points to 5,261.15.
In an interview to CNBC-TV18, Regan F Homavazir of Darashaw says, the Nifty is likely to head towards 5,365. Now to get on to any significant downside, you will have to break the psychological level of 5,000. In the event the 5,000 level does not break, we will see significant upsides, he adds.
Country's largest lenders State Bank of India, ICICI Bank and HDFC Bank climbed 2-3.7%. Index heavyweight and cigarette major ITC was up 3%.
Engineering and construction major by sales Larsen & Toubro and state-owned power equipment maker BHEL rallied 3.5% each.
Shares of Reliance Industries, Infosys, TCS, Tata Motors and ONGC gained 2%. Private power producer Tata Power topped the buying list, rising nearly 4% after the company completed the purchase of 51% equity shares of Tata BP Solar India Limited.
The rupee advanced by 33 paise to 56.47 against the US dollarled by sustained selling of the US dollar by banks and exporters.
The euro surged 1.24% to 1.26 against US dollar, poised to make its biggest daily jump in 8 months after European leaders agreed today to create a single supervisory body for euro zone banks and allow them to be recapitalised directly by the currency area's rescue fund, without adding to government debt.
Commodities too participated in the rally - Brent crude rose 2.2% to USD 93.36 a barrel and NYMEX crude was up 2.76% at USD 79.83 a barrel. Copper too went up 2% while precious metals like gold and silver were up 1-2%.
At 11:50 hours IST: Sensex, Nifty up 2%; ICICI Bank, L&T, ITC lead
Indian equity benchmarks rallied quite sharply, outperforming its Asian peers after better than expected steps have taken by European Union at its summit on first day to solve credit crisis.
Bulls remain strong since early trade. The BSE benchmark shot up 372.79 points or 2.19% to 17,363.55 and the NSE benchmark rose 112.35 points or 2.18% to 5,261.50.
Foreign research firm Morgan Stanley upgraded Indian equities to Equalweight, after being Underweight since the first quarter of 2011, saying India is now trading at a price to book multiple of 2.1x, close to the trough valuations of 2.0x in the 2002 and 2008 cycles.
"This is an indicator of the extent to which the India market is already pricing in the adverse global environment and the current domestic situation of high inflation and slower trend GDP growth," it said. Morgan Stanley adds Indian stocks tend to perform well versus MSCI emerging market indexes after a period of oil price declines.
The Indian rupee gained further, appreciating 45 paise to 56.35 as against the US dollar.
Country's largest private sector lender ICICI Bank, and engineering and construction major bysales Larsen & Toubro shot up 3.7% each.
Top commercial vehicle maker Tata Motors, Cigarette major ITC, India's most valued stock Reliance Industries, top software services exporter TCS and private sector lender HDFC Bank were up 2-3%.
Public sector lender State Bank of India gained 2.5% and car maker Maruti Suzuki surged over 4%.
Asian markets like Nikkei, Straits Times, Kospi and Taiwan Weighted gained more than 1.5% while Hang Seng rose over 2%. Shanghai was up 1% after European leaders have agreed to take emergency action to bring down Italy's and Spain's spiralling borrowing costs. The consensus saw the 17 bloc nations agreeing to create a single supervisory body for euro zone banks by the end of this year.
In an interview to CNBC-TV18, head- Asia strategy, Patrick Perretgreen of Citi says the latest developments from the two-day EU summit are positive for debt-ridden Spain. The news that without preferential seniority status, the European Stability Mechanism (ESF) would be able to lend directly to recaptalise banks without increasing a country's budget deficit is also a good move, he adds.
At 10:33 hours IST: Sensex rises 350 pts on broadbased buying; Cairn falls 6%
The 30-share BSE Sensex extended gains, rising more than 2% after a strong statement by European Union president on first day at EU summit (that scheduled to close today). Upgrade rating on India by Morgan Stanley also aided the rally.
The BSE benchmark moved up 334.26 points or 1.97% to 17325.02 led by buying interest across sectors. Meanwhile, the NSE benchmark shot up 96.55 points or 1.88% to 5,245.70.
ICICI Direct Research says, if the Nifty sustains above 5240 that may lead to a further up move towards the next higher resistance of 5350.
On the global front, Euro rose 1.12% to 1.2586 as against the US dollar after European Union reaffirmed its commitment to use its bailout funds flexibly. European leaders agreed on Friday to create asingle supervisory body for euro zone banks and to allow them to be recapitalized directly by the currency area's rescue fund without adding to government debt.
European Council chairman Herman Van Rompuy said the aim was to create a supervisory mechanism involving the European Central Bank by the end of this year, and to break the "vicious circle" between banks and sovereign governments.
He also said countries that were complying with European Union budget policies would be able to access the bloc's temporary EFSF and permanent ESM rescue funds to support their government bonds on financial markets.
Asian markets too gained further; Hang Seng jumped close to 2%. Nikkei, Straits Times, Kospi and Taiwan Weighted were up 1.5% while Shanghai was up 0.7%. The Dow Jones futures rose nearly 1%.
Back home, Jonathan Garner of Morgan Stanley expects 20-40% returns from Indian markets in next six months.
The BSE Capital Goods, Bank, Power, FMCG and Auto indices climbed 2-2.7%. Healthcare, Metal, IT and TECk were up around 1.5%.
Country's largest lenders State Bank of India, ICICI Bank and HDFC Bank rallied 2-3%. FMCG majors ITC and HUL moved up 2.7% each.
Engineering and construction major by sales Larsen & Toubro jumped 3%. Index heavyweight Reliance Industries was up 1.3%.
Top software services exporters TCS and Infosys rose 1.5% each. Commercial vehicle maker Tata Motors and utility vehicle manufacturer M&M gained 2-3%.
However, Cairn India tanked over 6% after sources said its parent company Cairn Energy Plc sold more than 6 crore shares in its Indian unit today.
The Indian rupee appreciated by 34 points to 56.46 as against the US dollar.
About three shares advanced for every share declining on the National Stock Exchange.
At 9:25 hours IST: Sensex gains 250 pts on strong Asian cues; banksup
The BSE Sensex and NSE Nifty started off Friday with more than 1% gap up following strong Asian cues due to positive developments at European Union Summit.
The BSE benchmark surged 248.79 points or 1.46% to 17239.55 and the NSE benchmark rose 69.50 points or 1.35% to 5,218.65.
European leaders agreed to create a single supervisory body for euro zone banks and to allow them to be recapitalized directly by the currency area's rescue fund without adding to government debt.
Among Asian markets, Hang Seng jumped 2%. Shanghai, Straits Times, Kospi and Taiwan Weighted were up 0.6-1.4%.
Back home, the Indian rupee too recovered by 22 paise to 56.58 as against the US dollar.
ICICI Bank, PNB, HUL, ONGC, Larsen & Toubro, SBI, BHEL, JP Associates, Sterlite, HCL Tech, Maruti, Bajaj Auto, Reliance Industries, Asian Paints, M&M, Sun Pharma and GAIL rallied 1.5-4%.
However, Cairn India tanked 3.5% on reports that its parent company Cairn PLC will be selling 6.7 crore shares via block deal. Its stake in Indian unit will come down to 18.3% from 21.8% post stake sale.
State-owned BPCL and HPCL were down marginally after these companies cut petrol prices by Rs 2.46 per litre since last midnight due to fall in crude oil prices in international market. WTI crude fell 3% to USD 77.7 a barrel yesterday.
The CNX Midcap shot up 72 points or 1% to 7,268. About four shares advanced for every share declining on the National Stock Exchange.
In the second line shares, Aban Offshore jumped 4% and Mercator gained 6%.
NCC was up 5.5% as Rakesh Jhunjhunwala increased stake in the company to 7.98%. He bought 7.5 lakh shares.
Subros rallied 9%. Manappuram Finance bounced back with 1.5% gains.
MTNL and REC were up over 2%.