The key indices held hit fresh intraday highs in mid-afternoon trade led by gains in index pivotals ICICI Bank, Reliance Industries and Larsen & Toubro. Metal and realty shares spurted. The 30-share BSE Sensex was up 348.32 points or 1.98%, up 264.33 points from the day’s low. All the 30 Sensex stocks were in green. All the sectoral indices on the BSE were in positive zone and the market breadth was strong.

The onset of monsoon in soybean-producing Gujarat, surge in US index futures and firm Asian and European stocks helped the domestic bourses today reach their highest level in more than 2 months.The end of a row over the regulation of unit linked insurance plans or Ulips, also aided the rally on the domestic bourses.

The market surged in opening trade on firm Asian stocks and following an end of a row over the regulation of unit linked insurance plans or Ulips. The Sensex and the Nifty hit their highest level in nearly 2 months since late April 2010. The market extended gains in morning trade, with the Sensex Nifty hitting their highest level in more than 2 months since mid-April 2010. The uptrend continued in mid-morning trade after the weather department said monsoon rains reached some regions of Gujarat.

The market was range bound in early afternoon trade. The key benchmark indices pared gains after hitting fresh intraday highs in early afternoon trade. The market hit a fresh intraday high in mid-afternoon trade.

Monsoon rains have reached some regions of Gujarat, a leading producer of soybeans, the India Meteorological Department (IMD) said in its latest forecast. The annual July-September rains were passing through the central city of Indore, and western Rajkot and Ahmedabad among other places, the IMD added.

Annual monsoon rains were 8% below normal in the week to 16 June 2010, the India Meteorological Department (IMD) said on 17 June 2010. The south west monsoon is important for India as about 60% of the country’s farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The south-west monsoon usually covers the entire country by mid-July. The weather office late April 2010 said rainfall is likely to be 98% of the long-term average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.

Meanwhile, in a major development, the government has ended the row over Ulip by promulgating an ordinance on Friday, 18 June 2010, stating that unit linked insurance policies with investment component are insurance products which will come under the regulatory jurisdiction of the Insurance Regulatory & Development Authority (Irda) and not the Securities & Exchange Board of India (Sebi). It amended four Acts to make it clear that Ulips are not securities and they did not form part of collective investment schemes or mutual funds.

These amendments nullify Sebi’s April 9 ban on 14 insurance companies from issuing Ulips because they are made effective retrospectively from that date. While making it amply clear that Sebi has no regulatory jurisdiction over Ulips, the government has also ensured that Sebi or any other regulator will not step into the jurisdiction of other hybrid products.

Significantly, the ordinance has not only lifted the uncertainty that affected sale of Ulips but has also brought relief to thousands of unit holders who were worried about their investments ever since the turf war broke out between the regulators two months ago.

European shares rose for the ninth session after China allowed more flexibility in the yuan exchange rate, boosting confidence in the global economy. The key benchmark indices in UK, France and Germany were up 0.95% to 1.54%.

Asian stock markets powered higher Monday, 21 June 2010, after the People’s Bank of China signaled over the weekend that it would end the yuan’s de-facto peg to the US dollar. The Shanghai Composite index was up 2.90% and Hong Kong’s Hang Seng was up 3.08%. The key benchmark indices in Japan, South Korea, Indonesia, Taiwan and Singapore were up by 0.30% to 2.43%.

Trading in US index futures indicated that the Dow jump 130 points at the opening bell on Monday, 21 June 2010.

Over the weekend, China’s central bank announced plans to loosen the yuan’s de-facto peg to the greenback. It also ruled out a one-time revaluation and said any strengthening of its currency would be gradual.

Back home, most Indian firms including Reliance Industries, L&T, Tata Steel and Tata Motors, have paid higher advance tax in Q1 June 2010 over Q1 June 2009. Higher advance tax payment normally indicates higher profits for the period under review. Advance tax payments by companies during the April-June quarter account for 15% of the total advance tax payable in the fiscal year.

Coming back to stocks, foreign funds have made heavy purchases of Indian stocks over the past few days. Foreign funds bought equities worth a net Rs 4029.36 crore in seven trading sessions from 10 June 2010 to 18 June 2010, as per data from the stock exchanges. The net inflow totaled Rs 2940.67 crore in June 2010 so far (till 18 June 2010) compared to a massive outflow of Rs 12071.13 crore in May 2010.

Domestic funds, which had absorbed some of the heavy selling from foreign funds last month, offloaded stocks worth a net Rs 1451.67 crore this month so far. Domestic funds had mopped up equities worth a net Rs 6361.17 crore in May 2010.

Emerging-market equity funds received the second-largest net inflows this year in the week to 16 June 2010, according to the latest data from global fund tracker EPFR Global. Emerging equities funds got $2.5 billion, while emerging bond funds received $659 million in the week ended 16 June 2010.

Global rating agency Fitch recently raised India’s local currency rating outlook to stable from negative as the rating agency forecast a decline in government debt to GDP ratio to 80% by March 2011 from 83% at the end of March 2010. It also upgraded India’s growth forecast to 8.5% in the year to March 2011 from earlier forecast of 7% growth.

The BSE 30-share Sensex was up 348.32 points or 1.98% at 17,919.14 at 14:16 IST. The Sensex rose 348.80 points at the day’s high of 17,919.62 in mid-afternoon trade, its highest level since 15 April 2010. The Sensex rose 83.99 points at the day’s low of 17,654.81 in early trade.

The S&P CNX Nifty was up 96.60 points or 1.84% to 5,359.20. Nifty hit a high of 5,366.75, its highest level since 15 April 2010.

The BSE Mid-Cap index was up 1.38% and the BSE Small-Cap index was up 1.41%. Both the indices underperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1913 shares advanced as compared with 921 that declined. A total of 104 shares remained unchanged.

All the 30 Sensex stocks were in green.

India’s largest private sector bank by market capitalisation ICICI Bank spurted 4.20%.

Index heavyweight Reliance Industries (RIL) rose 1.25% to Rs 1068.40. RIL chairman Mukesh Ambani said on Friday, 18 June 2010, at the company’s AGM that RIL is ready for a big surge forward. He also said that RIL looks forward to harmonious, constructive relationship with the Anil Dhirubhai Ambani (ADAG) group, adding that RIL will supply gas to ADAG group.

He also said the end of non-compete agreement with ADAG group has opened up unbounded opportunities in the power sector, which would be a growth engine for Reliance Industries. The company has plans for mega investments in the power sector and aims to bring project initiative to the sector. RIL will bid for ultra-mega power projects as part of its planned power foray.

He said RIL aims to build a significant position in the shale gas business and that RIL will commit capital to accelerate development of shale gas.

The RIL chairman said RIL will follow an “asset light” approach in telecom and collaborate with partners. RIL had recently announced its foray into the telecom sector by acquiring majority stake in Infotel Broadband Services, which emerged as the sole player to win a nationwide wireless broadband licence in an auction.

Reliance Retail, with 1,150 stores pan-India is equipped to be a national leader in the organized retail sector, he added.

India’s largest engineering and construction company by revenue Larsen & Toubro rose 2.08%. The stock today hit a 52-week high of Rs 1,843.75. Larsen & Toubro’s construction division recently secured orders aggregating to Rs 1440 crore for the construction of residential towers, township and factory buildings.

Shares of public sector companies edged lower on profit booking. The BSE PSU index was up 0.86% at 9,283.43, off the day’s high of 9,320.89. Steel Authority of India (up 3.73%), indian Overseas Bank (up 2.99%), IDBI Bank (up 2.27%), Container Corporation of India (up 2.25%), BEML (up 2.04%), Bank of Maharashtra (up 2.12%) and Bharat Heavy Electricals (up 1.88%), rose.

Corporation Bank (down 2.33%), Rashtriya Chemical & Fertilizers (down 0.67%), Neyveli Lignite Corporation (down 0.61%), MTNL (down 0.55%) and MMTC (down 0.10%), were the leading PSU stocks that declined.

Corporation Bank tumbled on turning ex-dividend for a dividend of Rs 16.50 per share.

Shipping sector stocks edged higher on improving global market sentiment. GE Shipping Company (up 2.88%), Mercator Lines (up 1.42%), Essar Shipping (up 1.11%), Shreyas Shipping (up 1.06%), Shipping Corporation of India (up 0.70%), Varun Shipping Company (up 0.47%), rose.

Shares of brokerage firms spurted on expectations that rise in equity market could boost share trading volumes. India Infoline (up 2.99%), Religare Enterprises (up 2.03%), Geojit BNP Paribas (up 1.20%), Indiabulls Securities (up 1.12%) and Motilal Oswal Financial Services (up 0.15%), rose.

Edelweiss Capital spurted 9.65% after the company said its board will meet on 24 June 2010, to consider bonus issue and stock split.

Financial services provider Reliance Capital rose 2.95%. The stock rose as the government said life insurers can sell unit-linked insurance plans without seeking approval from the Securities and Exchange Board of India, ending a spat between regulators over the product. Reliance Capital holds 100% in Reliance Life Insurance.