The BSE Sensex jumped over 350 points to edge above the psychological 25,000 levels – last seen on May 16, when Narendra Modi won a landslide victory in elections. The broader Nifty gained over 100 points and traded above the key 7,450 levels.
Over the weekend, Prime Minister-designate Mr Modi confirmed that he will head a leaner cabinet than his predecessor Manmohan Singh did. An official statement said on Sunday that Mr Modi has “adopted (the) guiding principle of ‘minimum government and maximum governance’ and also rationalization with a commitment to bring a change in the work culture and style of governance.”
Mr Modi is expected to merge and restructure several ministries like, sources said, transport, which could include surface transport, shipping, metro, bullet trains and even perhaps Railways and Civil Aviation.
These decisions seem to have gone down well with investors, analysts said.
Post the cabinet announcement later today, the government’s comments on fiscal deficit, inflation, and the relationship with central bank Governor Raghuram Rajan will be of prime importance to investors.
That could help sustain gains for the BSE Sensex, which on Friday became the best performing equity index in Asia-Pacific for 2014.
Overseas investors continue to be buyers in the markets, supporting bullish sentiments on the Street. On Friday, FIIs bought shares worth Rs. 417 crore, taking their total investment this year to over $7 billion.
Capital goods stocks led the rally, rising over 3 per cent, while metals, power, auto and PSU shares traded with over 2 per cent gains.
Among Nifty gainers, utility vehicle maker M&M traded 5 per cent higher, while Maruti Suzuki jumped 4 per cent. Cement stocks such as Ambuja and Grasim also saw buying interest.
Only eight stocks traded lower. Asian Paints fell 1.2 per cent, while Hindalco traded 0.85 per cent lower.
As of 10.25 a.m., the Sensex traded 367 points higher at 25,060, while the Nifty advanced 103 points to 7,470.