Sensex closes on a positive note; up by 472 pts

Mumbai: The Sensex gained 471.7 points (up 3 per cent) as relief rally swept market sentiments. After two weeks of bloodbath, investors loosened their purse strings and resorted to short covering. The rally was supported by strong global cues on hopes of easing the European debt crisis. The Sensex closed well above the 16,000 level, at 16,167.13. The Nifty rose 141.25 points, to end at 4,851.30. The Indian rupee too saw short covering and was trading at 51.95 to a dollar.

According to Sudarshan Sukhani of technicaltrends.com, it's a relief rally after 750 points of decline on Nifty. Dipan Mehta, Member BSE and NSE too has same view. Sukhani feels another 50-100 points of rally is quite possible.

Every market across the globe gained quite sharply after reports that International Monetary Fund is preparing euro 600 billion loan for Italy if debt crisis worsens. But the IMF denied the same. Italian Prime Minister Monti is expected to unveil measures on December 5.

But the experts believe that European woes dont seem to be ending soon. Michael Power, global strategist of Investec Asset Management says, there are going to be casualties. "I don't think within a year Euro will be constituted as it has been. We are going to lose countries from the European currency," he adds.

France's CAC, Germany's DAX and Britain's FTSE were up 2-3.8 per cent while the Dow Jones futures shot up 258 points, pointing strong opening.

Back home, every sector was backed by bulls. The BSE Metal Index was the star performer, rising 5 per cent. Bank and Oil & Gas surged 3.5 per cent each.

Among frontline stocks, Hindalco topped the buying list, rising 9 per cent. Shares of SBI, HDFC and Tata Motors jumped 5 per cent each.

Index heavyweights Reliance Industries, ICICI Bank, Bharti, ONGC and BHEL gained 3.5-4 per cent. ITC, HDFC Bank and TCS rose 2-2.5 per cent. However, Bajaj Auto and Hero Motocorp underperformed, falling 1.7 per cent and 0.7 per cent, respectively.

The Indian rupee appreciated by 0.63 per cent to 51.92 a dollar (at the time of closing of equities) led by short covering. But, Olivier Desbarres, director and head of FX Strategy - Asia-Pacific at Barclays Capital believes that the rupee will continue to be under pressure in the near term.

According to Debarres, the rupee will continue to fall due to the fundamental weakness in India such as current account deficit, high inflation, high interest rates and limited portfolio inflows. He goes on to say that the rupee's fortunes are also dependent on what is happening in the eurozone and the euro-dollar.

In the second line shares, Educomp Solutions gained 16 per cent after the company received Rs 410 crore post signing securitisation deal with banks.

Financial Tech, JSL Stainless, Glodyne Tech and HOEC rallied 8-13 per cent. However, Shoppers Stop, Kwality Dairy, Vaarad Ventures, SKS Microfinance and Pantaloon Retail plunged 4.5-7 per cent.

Advancing outnumbered declining ones by 1958 to 864 on the BSE.

Total traded turnover on both exchanges was more than Rs 92,300 crore, which was low as compared to Rs 98,700 crore on Friday.