The market closed higher today after the Modi government raised minimum support price (MSP) of kharif crops which boosted sentiment. While the Sensex rose 266 points to 24,327 level, the Nifty gained 70 points to 10,769. Auto stocks led the gains with BSE auto index rising 313 points or 1.31% to 24,327 level. The BSE bankex too rose 201 points to 29,326 level, a gain of 0.69%.
Bajaj Auto (3.95%), Maruti Suzuki (2.69%), HDFC (2.09%) and HUL (2.03%) were the top Sensex gainers.
Top Sensex gainers seem to be direct beneficiaries of the prospects of rising income of farmers after the CCEA raised hike in price of kharif crops. The decision will lead to a rise in purchase power of farmers and subsequently sales of the products of these companies.
Stocks of rural players such as Hero MotorCorp (0.43%) and Mahindra and Mahindra (0.69%) too closed higher on the development.
The stock of market heavyweight Reliance Industries Ltd (RIL) too closed 1.90% higher at 990 level on the BSE.
VK Sharma, head, Private Client Group & Capital Market Strategy at HDFC Securities said, "The markets changed gears in the afternoon once the news came in that the CCEA had cleared the proposal to give a remunerative MSP of 150% of the production cost for the Kharif crop. Though on the face of it , it would increase inflation and the fiscal deficit, the markets rallied as it was already priced in. The FM had announced this very step in the budget. I think the markets have taken the view that the out go may not be much more than in the past. The US markets will be closed today for Independence Day holiday. That was also one of the reasons for the street to be bullish as they would again make their own weather tomorrow. We believe 10,830 will be hard but to crack for the Nifty."
The Shriram Transport Finance stock was the top loser on the BSE closing 11.83% lower at 1144 level after its annual report mentioned a Rs 870-crore corporate guarantee which the firm provided to its unlisted entity SVL Ltd. The stock which opened at 1,225 fell 17.89% to an intra day low of 1,066.10 level on the BSE. The guarantee is with respect to non-convertible debentures issued by SVL Ltd.
Market breadth was marginally negative with 1,265 stocks closing higher compared with 1,350 ending in the red on BSE.
Meanwhile, the rupee closed lower by 15 paise to 68.73 level in trade today.
World shares were mostly lower on Wednesday as European shares tracked losses in Asia and on Wall Street, where tech shares were hit by worries over trade tensions between Beijing and Washington.
Germany's DAX lost 0.4 percent to 12,306.49 and the CAC 40 of France lost 0.1 percent to 5,311.06. Britain's FTSE 100 slipped 0.2 percent to 7,579.87. But S&P 500 futures added 0.2 percent and Dow futures were up 0.1 percent.
Japan's Nikkei 225 index fell 0.3 percent to 21,717.04 and the Shanghai Composite index dropped 0.1 percent to 2,759.13. Hong Kong's Hang Seng index fell 1.1 percent to 28,241.67 and the Kospi in South Korea lost 0.2 percent to 2,265.46. Australia's S&P ASX/200 gave up 0.4 percent to 6,183.40. Shares rose in Southeast Asia and Taiwan.
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