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Stimulus hopes boost investor sentiments

February 9, 2009

The BSE Sensex ended on a strong note on Monday, extending gains to more than 3 percent on hopes of fresh economic stimulus measures and another round of rate cuts by the Reserve Bank of India (RBI).

Gains were led by heavyweights like Reliance Industries, which was up 3.3 percent; ICICI Bank, which rose 5.1 percent, and State Bank of India which added 2.6 percent.

Amongst sectors, the Metals Index topped the charts, gaining over 4 percent mainly on a surge in steel makers. Bhushan Steel jumped 16.98 pct while Tata Steel and Welspun Gujarat rose 7.2 pct and 7.3 pct respectively.

The Oil & Gas Index gained over 3 percent, helped mainly by a rise in Reliance Industries, which was up 3.3 pct at 1389.05, and ONGC which was up 5.95 percent at 721.6 rupees.

Among individual stocks, Satyam continued moving south, closing 2.7 percent lower at 46.1 rupees. Its chairman today announced that the board would decide on a long-term action plan by next week, including a possible sale of the company.

Shares of Piramal Healthcare, which surged 25 percent in early trade on reports of a likely acquisition by GlaxoSmithKline and Sanofi Aventis, ended 1 percent lower at 192.55 rupees as the current valuation does not convince the company for a sell-out.

On the global front, equities were weaker in Europe and Japan, but emerging markets were putting in a fifth consecutive day of gains, reflecting positive investor sentiments. Caution remained over the contents of both the U.S. stimulus package and a delayed plan to rescue the U.S. banking system.

At home, hopes of an economic stimulus package have been bolstered by official estimates that the economy is expanding at its slowest pace in six years. This apart, analysts expect the RBI to ease the liquidity situation in the country with another round of rates cuts soon. Do you think these measures will support investor sentiments and help the benchmark consolidate its gains?

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