Sensex snaps losing streak, closes up 151 points on hopes of market-friendly reforms

The 30-share market barometer opened lower at 13,663.54 and seesawed between the day's high of 13,936.93 and 13,611.30 before settling in the green.

After Friday's climb, the prime index is up 38.56 percent this year, after slumping nearly 52 percent in 2008, a year marked by economic downturn, credit squeeze, rising inflation and high global crude prices. Thanks to the massive 17.34 percent jump on Monday following the announcement of Congress-led UPA's unexpectedly easy election win over the weekend, the Sensex closed up 14.08 percent during the week, its biggest weekly rise in 17 years.

The day's biggest gainer was engineering conglomerate Larsen & Toubro (L&T), which jumped 4.73 percent to close up at Rs.1301.40.

Close at its heels was India's largest private sector lender ICICI Bank, which surged 4.54 percent.

Other financial majors viz. HDFC, State Bank of India and HDFC Bank soared 1.09 percent, 1.01 percent and 0.13 percent.

Utility majors Reliance Infrastructure and Tata Power climbed 0.97 percent and 0.57 percent respectively.

Consumer goods makers Hindustan Unilever and ITC advanced 0.72 percent and 0.60 percent respectively.

Sensex heavyweight Reliance Industries moved up 3.13 percent.

Other major gainers were NTPC (up 1.93 percent), Sun Pharmaceuticals (up 1.59 percent) and Infosys Technologies (up 1.11 percent).

Among the laggards, aluminium producer Sterlite Industries topped the list, plunging 4.32 percent to close down at Rs.507.95.

Rival Hindalco Industries sank 2.53 percent.

Auto majors Mahindra & Mahindra, Tata Motors and Maruti Suzuki tumbled 3.57 percent, 3.29 percent and 1.14 percent respectively.

Technology outsourcers TCS and Wipro slipped 2.27 percent and 1.84 percent respectively.

Cement makers Grasim Industries and ACC eased 2.20 percent and 1.89 percent respectively.

Other major losers were ONGC (down 2.74 percent), DLF (down 2.34 percent) and Reliance Communications (down 2.09 percent).

The BSE Midcap and Smallcap indexes closed up 1.75 percent and 3.19 percent respectively at 4755.68 and 5513.16.

Among the sectoral indices, Consumer Durables (down 1.13 percent) and Auto (down 1 percent) emerged as the biggest losers while Capital Goods (up 2.90 percent) and Bankex (up 1.80 percent) were the biggest gainers.

While the number of gainers and losers in the Sensex were evenly matched, the broader market breadth was positive as 2139 gainers led 595 losers while 49 closed unchanged.

Elsewhere, the broader 50-share S&P CNX Nifty index of the National Stock Exchange (NSE) moved up 0.66 percent or 27.60 points to close at 4238.50.

Analysts said they were surprised by Friday's leap as they felt the market was trading in overbought zone and would be hit by profit-booking.

However, euphoria surrounding the appointment of Manmohan Singh as the prime minister for the second time in a row and hopes for pro-market reforms refused to die down, the analysts said.

"Valuations have become high, but people are buying because they may be left out otherwise," said D.D. Sharma, vice president at Anand Rathi Securities.

"There are so many desperate buyers because nobody is betting on the market going down. You will see people buying at every dip from now," Sharma said.

"The market is trading at a 55 percent premium to emerging markets compared with its long-term average of 8 percent, its recent low of 23 percent and January 2008 high of 205 percent," brokerage house Morgan Stanley said in a report, raising its end 2009 target for the Sensex to 15,300 points, a rise of 10 percent from current levels.

"We, now believe, that there is greater probability of our bull case rather than our bear case," analysts Ridham Desai and Sheela Rathi wrote in a note.

According to brokerage CLSA Asia-Pacific Markets, with reduced political risk, there may be even more interest from foreign funds.

Foreign funds, which sold $13.3 billion of Indian equities in 2008 and dragged shares down by more than half, led the buying in the past two months, injecting about $5 billion into the market, including more than $1 billion in this week.

Meanwhile, elsewhere in Asia, the markets eased after a drop on Wall Street overnight on fears the United States, with its increasing budget deficit and weakened economy, could lose its AAA rating.

Japan's Nikkei 225 slipped 0.41 percent to 9225.81; Hong Kong's Hang Seng declined 0.80 percent to 17,062.52; China's Shanghai Composite eased 0.50 percent to 2597.60; and South Korea's Kospi moved down 1.26 percent to 1403.75.

However, bucking the trend, Singapore's Straits Times rose 1.55 percent to 2245.27 and Taiwan's Taiex climbed 0.28 percent to 6737.29.