The Hindu Business Line : Sensex at 6-month high on US vote

Analysts said the rally in IT stocks, spearheaded by Satyam, Infosys, and Wipro, was mainly on expectations that the apparent re-election of the US President, Mr George W. Bush, will improve their business prospects. Banking stocks, such as SBI and ICICI Bank, gained on hopes of a possible hike in interest rates.

While the BSE IT index rose by 2.68 per cent, banking index Bankex gained 3.32 per cent.

The mood in the market remained optimistic since morning with Mr Bush maintaining a lead over his Democrat rival, Mr John Kerry, as votes were being counted. And, according to analysts, the possibility of Mr Bush's re-election has eased fears over outsourcing.

Said Mr Abhay Aima, Country Head (Private Banking), HDFC Bank, "Sentiment was buoyed on expectation that Mr Bush would come back to power."

However, he said the overall rally in the market was liquidity-driven. "When the liquidity is driven by local money then there is a limit, but when it is led by foreign money it is very difficult to take a call."

At the close of trading, the Sensex ended with a gain of 87.78 points (1.53 per cent) at 5,842.54, its best close since April 27. The NSE's S&P CNX Nifty gained 23.70 points (1.31 per cent) to close at 1,837.40.

The last three trading sessions, including Wednesday, has seen the Sensex gain 193 points.

Major buying was seen from local as well as foreign funds in IT stocks, as Mr Bush is seen to be a supporter of free trade and unopposed to outsourcing.

Mr Sandeep Shenoy, Strategist at stock broking firm Pioneer Intermediaries, said Wednesday's rise was more of a relief rally over the results of the US elections. However, he cautioned that stock prices have gone up sharply and investors should be cautious.

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