Sensex tops 28,000-mark to end at near three-month high; bank, IT, capital goods shares sparkle

Domestic stocks extended gains for the second straight session Wednesday, with Sensex breaching the crucial 28,000-mark for the first time since 17 April, driven by an encouraging May core sector data and government’s announcement to adequately capitalise PSU banks which fuelled spectacular buying in banking, IT, capital goods and power shares.

As a result, the 30-share BSE S&P CNX Sensex closed at a near three-month high at 28,020.87, up 240.04 points, or 0.9 percent from previous close. Intra-day, the index touched a high of 28,099.25, up 318 points before trimming some gains towards the close.

Market breadth was firm with 1,882 stocks advancing against 887 declines on BSE.

Investors shrugged off the continuing development on the Greece debt crisis front, even as latest report indicated that Greece PM may accept the bailout terms set by its international creditors ahead of its referendum falling this Sunday.

An economist with Bank Julius Baer & Co, a Switzerland-based financial services company, told CNBC-TV18 that the European Central Bank (ECB) is now very well equipped to respond to the Greece crisis, and that he expects the country to vote for their stay in European Union in the referendum on 5 July.

In anticipation that Greece will eventually be saved from the possible exit from European Union, global indices bounced back sharply with key European gauges surging over 1-2 percent while other key Asian indices also ending in positive territory.

Back home, investors cheered the May core output data announced Tuesday post the market hours. data released by the commerce and industry ministry showed the core sector, which comprises of electricity, coal, steel, cement, refinery production, natural gas, crude oil and fertilizers, rose an annual 4.4 percent in May compared with a contraction of 0.4 percent in April.

As a result, shares of BHEL 3.7 percent to Rs 256.95, Cipla rose 2.7 percent to Rs 633.25, Tata Motors moved up 2.4 percent to Rs 444.80 and L&T was up 1.5 percent at Rs 1,809.80.

Investors flocked to IT shares on report the sector may report impressive numbers in the upcoming April-June quarter earnings. Shares of TCS rose 1.6 percent to Rs 2,591.50, Wipro gained 1.5 percent to Rs 552.35 and Infosys was up 1.2 percent at Rs 997.70.

Shares of public sector banks (PSBs) clocked up significant gains on reports the government is working on a comprehensive package for these banks in the backdrop of surging bad loans.

“NPAs are simply a symptom of the underlying issues that need to be resolved,” Minister of State for Finance Minister Jayant Sinha told a gathering of private equity investors. “We are preparing a comprehensive package which we will bring out shortly.”

Shares of Union Bank of India jumped nearly 6 percent to Rs 155.95, Bank of India rose 5 percent to Rs 179.65, Bank of Baroda gained 4 percent to Rs 150.05, IDBI Bank added 3.4 percent to Rs 62.85 and SBI was up 1.8 percent at Rs 267.60.