Indian markets joined a global stock market rally on Monday after the US government

RELATED ARTICLES Banks fall on inflation worries

announced plans to take control of troubled mortgage giants Fannie Mae and Freddie Mac. Local investors also cheered India winning a historic waiver from 45-nation nuclear suppliers group (NSG).

Banking, capital goods and power sector stocks led the rally. The benchmark Sensex rose by over 600 points in morning trade, but pared gains due to profit booking in the last one hour of trading. The 30-share index ended up 461.14 points, or 3.18 per cent, to close at 14,944.97. It hit the day’s high of 15,107.01 points intra-day. All the stocks in the index ended in positive territory. National Stock Exchange’s Nifty rose 130 points, or 2.99 per cent, to 4,482.30.

The Indian markets added Rs 1,00,273.2 crore in market capitalisation. Out of the total 2768 stocks traded on the Bombay Stock Exchange, 1,665 stocks advanced while 1,034 stocks declined. “While the NSG waiver is a clear long-term positive for Indian markets, the bailout package for Freddie Mac and Fannie Mae will have a short term positive impact on global markets,” said Andrew Holland, managing director (strategic investment group), DSP Merrill Lynch India.

According to Citigroup analysts Rohini Malkani and Anushka Shah, besides the direct economic impact of improving India’s energy security, the NSG waiver has also geo-strategic implications. “By making available much needed raw material, the deal would help enhance capacity utilisation of India's nuclear reactors which are currently operating at about 50-60 per cent levels,” they wrote in a note to clients.

Under the Freddie and Fannie bailout plan, the US treasury will receive $1 billion of preferred shares in each company, and has pledged to provide as much as $200 billion to the companies as they cope with heavy losses on home loan defaults.

World markets cheered the US government action. Major Asian markets, except China, rose between 3 per cent and 6 per cent. Japan’s Nikkei 225 advanced 3.38 per cent, while South Korea's Kospi surged 5.15 per cent. Others like Hong Kong's Hang Seng (up 4.32 per cent), Taiwan’s Taiex (up 5.57 per cent) and Singapore's Straits Times (up 4.67 per cent) also logged impressive gains.

However, China’s Shanghai Composite index ended down 2.7 per cent on concerns over slower economic and corporate profit growth.

All European stock market indexes were trading firm between 3 per cent and 5 per cent at the time of going to press. The pan-European FTSE Eurofirst 300 index advanced 3.7 per cent, while UK’s FTSE 100 was up 3.81 per cent.

Banking and financial stocks were the major beneficiaries across the globe. In India too, the BSE Bankex, which represents 18 major public and private sector banks, was the biggest gainer among all the sectoral indexes. It gained 284.31 points, or 3.96 per cent, to close at 7,457.16 points. Shares of State Bank of India, India’s biggest bank, rose 4.81 per cent to close at Rs 1,591.55, while that of second-biggest ICICI Bank moved up 4.89 per cent to finish at Rs 720.75.

Capital goods and power stocks, which are expected to benefit from the nuclear trade, were also in great demand. The BSE Capital Goods index gained 3.70 per cent, while the BSE Power index advanced 3.36 per cent.

According to CLSA analysts Rajesh Panjwani and Anirudha Dutta, NTPC will be the key listed beneficiary among the utilities, while BHEL and L&T will be among the equipment manufacturers. According to them, transmission and distribution (T&D) suppliers like Crompton Greaves, Areva T&D, ABB and Siemens are also set to benefit in the long run from acceleration in power capacity addition. Share of Larsen & Toubro, NTPC and Bhel rose more than 10 per cent in the morning trade. However, they gave up half of their gains by the end of the session and finally closed up 3 per cent to 5 per cent.