Bullish Sensex closes 240 points higher on reports of robust advance tax payouts

The Sensex closed at 16,454.45 on Tuesday, its highest close since late May 2008, driven mainly by auto, banking and metal stocks.

Twenty-seven components closing in the green with real estate giant DLF leading the charge with a 5.20 percent jump.

Auto majors Hero Honda Motors, Maruti Suzuki, Tata Motors and Mahindra & Mahindra soared 3.47 percent, 1.44 percent, 1.33 percent and 1.32 percent respectively.

Among metal stocks, Sterlite Industries, Hindalco Industries and Tata Steel surged 3.34 percent, 3.30 percent and 2.54 percent respectively.

Financial majors State Bank of India, HDFC, ICICI Bank and HDFC Bank climbed 2.71 percent, 2.12 percent, 2.03 percent and 1.27 percent respectively.

Sensex heavyweights Reliance Industries, TCS and Larsen & Toubro advanced 1.55 percent, 1.92 percent and 1.35 percent respectively, fueling the bull-run.

Other major stocks that moved up were Jaiprakash Associates (up 2.92 percent), Reliance Communications (up 2.80 percent) and Reliance Infrastructure (up 2.65 percent).

However, performing on a disappointing note were India's largest oil explorer ONGC (down 0.93 percent), telecom giant Bharti Airtel (down 0.80 percent) and FMCG major Hindustan Unilever (down 0.31 percent).

The second-rung stocks fared well too with the BSE Midcap and Smallcap indexes closing 1.83 percent and 1.33 percent higher at 6039.07 and 7228.68 respectively.

The overall market breadth was positive as 1801 gainers led 994 losers while 78 closed unchanged. Hectic buying activity were seen in realty (up 3.91 percent), metal (up 3.74 percent), banking (up 2.50 percent) and auto (up 2.33 percent) counters.

Elsewhere, the broader 50-share S&P CNX Nifty of the National Stock Exchange (NSE) closed 1.74 percent or 83.50 points higher at 4892.10.

According to the analysts, market confidence was boosted by reports that some corporates had paid advance tax higher-than-expected, triggering hopes for a pickup in economic recovery.

"Some good advance tax numbers contributed to the rally today. Whatever we have seen so far is good, and expect other figures to be robust as well," said Neeraj Dewan, director of Quantum Securities.

Agrees Mahesh Patil, co-head of equity at Birla Sun Life Mutual Fund. According to Patil, though most stocks were trading well beyond their fundamentals, "but as we expect earnings upgrade, it would not look expensive."

The analysts said to watch out for financial stocks being bullish in coming days as State Bank of India, which paid advance taxes for the September quarter sharply higher than a year ago, indicating robust profit, could well set a trend.

Banks are also bullish on hopes the central bank will relax accounting rules for their government bond holdings, a move that will lower provisioning for notional mark-to-market losses, analysts said.

Other benchmarks that witnessed a quarter-on-quarter (QoQ) increase in their advance tax payouts were TCS, Tata Motors and Mahindra & Mahindra.

Meanwhile, Asian markets closed in the green on growing confidence about the pace of global economic recovery.

Japan's Nikkei 225 climbed 0.15 percent to 10,217.62; China's Shanghai Composite soared 0.23 percent to 3033.73; Taiwan's Taiex surged 1.23 percent to 7346.26; South Korea's Kospi jumped 1.13 percent to 1653.40; and Indonesia's Jakarta Composite rose 1.57 percent to 2420.11.

However, bucking the trend, Hong Kong's Hang Seng slipped 0.31 percent to 20,866.37 while Singapore's Straits Times eased 0.05 percent to 2638.40.