Sensex gains over 300 to surge above 17,000 as on 30th July, 2012

The Nifty and the Sensex ended the session on Monday with a gain of over 1.8 per cent.

The Nifty was up 99.95 points at 5,199.80 and the Sensex was up 304.49 points at 17,143.68.

"There is optimism on the street that central banks from India and Europe are trying concrete steps to tackle problems in their regions,” said a dealer of an Indian brokerage.

“The RBI is trying hard to propel growth and tackle inflation simultaneously while the European Central Bank is trying to solve the debt crisis,” he added.

Among BSE sectoral indices, Power (up 3.58 per cent), Realty (3.13 per cent), Capital Goods (3.00 per cent) and Bankex (2.67 per cent) led the rally.

Top gainers were Tata Motors, SBI and GAIL, while the top losers were ONGC and HUL.

With positive vibes coming from the European leaders that they would intervene to help the troubled countries from high cost of borrowing, European stocks on Monday jumped to their highest level since April.

While at the political level, media reports said that the French President, Mr François Hollande, and the German Chancellor, Ms Angela Merkel, both committed to “do everything to protect the Euro Zone’’, the ECB President, Mr Mario Draghi, was quoted as saying that the bank will do “whatever it takes’’ to protect the Euro.

All these comments soothed the sentiments in the Wall Street on Friday when the Dow Jones index got past the 13,000 mark to end at 13,075, a gain of about 187 points. This had a contagion effect on the Asian markets this morning.

But how much the global rally would benefit the Indian markets remained to be seen. A major factor that could determine the course of the markets during the week could be the RBI decision on interest rates that would be made tomorrow.

With the market and even the bankers pinning hopes on the RBI easing rates and injecting greater liquidity into the system, any hawkish stance may spook the market further.

Also, the hammering the PSU bank stocks had witnessed, particularly on Friday when post-results stocks like PNB were pounded over the growing NPAs, makes hopes of market recovery fragile.

The other issue is whether the frenzied sell-off witnessed in some of the companies, whose promoters had pledged a significant part of their holdings, had ended or whether more surprises were in the offing.