Sensex soars past 16,500...Nifty tops 4950

Indian equity markets kicked off new trading week on a solid note, with the main indices ending near day's high, as investors welcomed an agreement between the leaders of Germany and France to strengthen European banks. The NSE Nifty finished above the 4950 mark while the BSE Sensex ended over the 16,500 levels owing to all-round buying. Both the indices gained 2% each, notwithstanding mixed cues from US and Asian markets.

Benchmark Indian stock indices started the day near session lows. But, from then on there was no looking back as they went from strength to strength led by strength in Realty, IT, Oil & Gas and Telecom stocks. The Mid-Cap and the Small-Cap stocks too witnessed smart gains.



Sentiment got a boost after the European markets opened with handsome gains after German Chancellor Angela Merkel and French President Nicolas Sarkozy said they will reveal plans to recapitalize the banking sector before the end of the month.

The euro advanced against the dollar while the dollar index slid. Crude oil and precious metals futures too rallied. Back home, the rupee rose in line with gains in other regional peers and local stocks.

"Going forward, the outlook will hinge on progress made by Europe in addressing its debt crisis apart from earnings from the likes of IT major Infosys. IIP data for August and inflation report will also be on investors' radar. Concerns over RBI's policy stance may prevail after the benchmark Government bond yields surged to three-year highs of 8.71% amid mounting apprehensions over the Centre's fiscal situation," says Amar Ambani, Head of Research, IIFL - India Private Clients.

Finally, the BSE Sensex ended at 16,557, up 324 points. It had earlier touched a day's high of 16,595 and a day's low of 16,231. It opened at 16,270. The NSE Nifty closed at 4,979, up 92 points.

Leaders of Germany and France promised a new comprehensive plan to recapitalise euro zone banks by the end of the month though details of the plan won’t be available until later this month. The announcement by leaders of the bloc's top two economies followed the downgrade of credit ratings of Italy and Spain last week.

Separately, Belgium, France and Luxembourg have reportedly agreed on a plan to rescue Dexia, the French-Belgian bank recently hit by a liquidity shortage.

Dexia SA's Board has approved a rescue deal, including nationalisation of its Belgian banking division, besides securing a 10-year funding guarantee up to a maximum of €90bn.

Shares of Infosys gained as investors braced for its Q2 results on October 12. Reliance Industries was also trading with a positive bias following a 'Buy' call by a local brokerage house.

On the other hand, Maruti Suzuki India shares were under pressure after the company took stringent action against some of the agitating workers at it's Manesar factory. "The plant is effectively captive in the hands of striking workers who are bent upon violence," Maruti said, describing the situation at the factory as grave.

India's largest car maker called on authorities to evict 1,500 striking workers who have seized control of its Manesar plant, amid allegations of sabotage and violence.

Sun TV stock was down after the CBI raided the Chennai premises of Dayanidhi Maran in connection with the 2G spectrum scam. Sun TV was among the three companies named in the FIR by the CBI, according to reports.

Shares of Apollo Hospitals fell after the CBI raided the premises of group promoter Sunita Reddy in connection with the Aircel-Maxis deal. Reddy, who has not been named in the FIR, was the chairperson of Aircel in 2005.

Bharti Airtel was up while RCOM and Idea Cellular were flat ahead of the release of the new Telecom Policy.