BSE Sensex rose for the third consecutive week, surging 289 points to close at a fresh 14-month high of 18,752.83, on persistent buying on slew of economic reforms announced by the government, despite rise in retail inflation.
Investors cheered last weekend's big-bang reforms, mainly Foreign Direct Investment (FDI) in retail and civil aviation sectors, as well as hiking diesel and LPG prices and assurance of Samajwadi Party to government of its support on a day Trinamool Congress pulled out of the UPA coalition.
On Monday, the Reserve Bank of India (RBI) reduced Cash Reserve Ratio by 0.25 per cent to release Rs 17,000 crore of primary liquidity into the banking system while kept the key short-term lending rates unchanged in view of risks from inflation.
Brokers said rate-sensitive shares like realty, banking and auto sector attracted buying as RBI indicated it may cut rates later if inflationary pressures subside. Capital goods, power, metal and refinery also saw demand.
The Sensex also got support since last weekend after the US Fed announced a third round of stimulus measures.
Power, capital goods and metal stocks also led Sensex's rise after the government said withholding tax on overseas borrowings will be slashed to 5 per cent from 20 per cent.
The approval to Rajiv Gandhi Equity Savings Scheme (RGESS) to encourage first-time retail investors to invest in stocks, too lifted the sentiment.
Sensex had resumed higher at 18,619.90 and moved in a wide range of 18,866.87 and 18,291.93 before ending the week at 14-month high of 18,752.83, showing a smart rise of 288.56 points, or 1.56 per cent. The Sensex had ended at 18,871.29 on 25th July 2011.
Meanwhile, the Consumer Price Index (CPI), retail inflation, rose to double digits at 10.03 per cent in August from 9.86 per cent in July on soaring vegetable prices.
Of the 30-share Sensex pack 20 scrips finished with gains while 10 others ended with losses.
Major gianers from the Sensex pack were Jindal Steel (14.60 per cent), BHEL (13.53 per cent), SBI (12.28 per cent), Bharti Airtel (9.40 per cent), Larsen (6.54 per cent), Icici Bank (5.85 per cent), Sterlite Ind (5.62 per cent), Tata Power (4.95 per cent), Maruti Suzuki (4.09 per cent), ONGC (4.02 per cent), Mah and Mah (4.00 per cent), Hero Motoco (3.35 per cent), Bajaj Auto (3.24 per cent) and Gail India (3.16 per cent).
However, TCS dropped by 7.69 per cent followed by Dr Reddy's 5.86 per cent, Wipro 3.21 per cent, Coal India 2.73 per cent, HUL 3.26 per cent, Cipla 2.09 per cent, Infosys 1.44 per cent and Sun Pharma 1.26 per cent.
Among the sectoral indices, the BSE-Realty rose by 8.84 per cent followed by Bankex 6.96 per cent, BSE-CG 6.88 per cent, BSE-Power 5.82 per cent, BSE-PSU 4.22 per cent, BSE-Auto 3.26 per cent and BSE-Metal 2.97 per cent while the BSE-IT fell by 3.56 per cent, BSE-HC by 2.18 per cent, BSE-FMCG by 2.05 per cent and BSE-Teck by 1.28 per cent.
The total turnover at BSE and NSE rose to Rs 10,802.64 crs and Rs 63,606,56 crs respectively as against the last weekend's level of Rs 10,663.21 crs and Rs 49,445.49 crs.