Sensex surges 2.5% in choppy trade

Volatility ruled the roost on the bourses ahead of the outcome of the elections for the recently concluded parliamentary elections. The market sentiment was firm as foreign funds made heavy purchases. Blue chips witnessed intermittent rally and select non-Sensex stocks surged on hopes of a recovery in the second in the second half of the fiscal year ending March 2010.

Investors are bracing for wild swings on the bourses in the near term after the exit polls indicated a fractured mandate in the just concluded parliamentary election

The 30-share BSE Sensex jumped 296.99 points or 2.5% to 12,173.42 in the week ended 15 May 2009. The barometer index rose for the 10th week in a row, the longest winning streak in almost three years

The BSE Mid-cap index rose 36.65 or 0.97% in the week. The BSE Small-cap index was almost unchanged for the week.

Trading for the week began on a weak note. The key benchmark indices extended losses for the second straight day on Monday, 11 May 2009, as profit taking emerged on weak global stocks and on political uncertainty. The barometer index fell 193.44 points or 1.63%. Banking, metal, IT and capital goods stocks led the fall. Index heavyweight Reliance Industries (RIL) also edged lower.

The unemployment rate in the US jumped to 8.9%, the highest level since 1983, data on 8 May 2009 showed. Earlier, the Federal Reserve stress result announced on Thursday 7 May 2009 determined that 10 US banks need to raise a total of $74.6 billion in capital, a finding that Chairman Ben S. Bernanke said should reassure investors about the soundness of the financial system.

Speculation that the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) was gaining momentum in the parliamentary elections triggered a solid surge on the domestic bourses on Tuesday, 12 May 2009. Firm global stocks and buying by foreign funds supported the rally. The BSE 30-share Sensex jumped 475.04 points or 4.07%. Index heavyweight RIL galloped. Banking, IT, capital goods and realty stocks surged.

Data showing a strong growth in consumer durables production in March 2009 reinforced expectations of a recovery of the economy. Production of consumer durables jumped 8.3% in March 2009 as compared to a 2% decline in March 2008. Overall, India's industrial output fell a steeper-than-expected 2.3% in March 2009 over March 2008, its third fall in four months, data released by the government during trading hours on Tuesday showed. The manufacturing segment shrank by 3.3%. Mining rose by a modest 0.4% and electricity output climbed by a decent 6.3%.

The industrial production figure for February 2009 was revised to a 0.7% drop from a preliminary estimate of a 1.2% decline. Industrial output rose 2.4% the 2008/09 fiscal year (April-March), down from a revised 8.5% in 2007/08.

Fears of a fractured mandate in the parliamentary election pulled the market lower on Wednesday, 13 May 2009, in what was a highly volatile trading session. Volatility in index heavyweight Reliance Industries and banking and IT stocks caused volatility in the key benchmark indices. The BSE 30-share Sensex lost 138.38 points or 1.14%.

The key benchmark indices fell for the second straight day on Thursday, 14 May 2009, after the exit polls indicated a fractured mandate in the just concluded parliamentary election. Rating agency Fitch's warning that the government needs to cut fiscal deficit to avoid having its credit rating lowered also weighed on sentiment.

While current economic conditions are prompting many governments to undertake counter-cyclical stimulus measures, the recent deterioration in India's fiscal position accentuates underlying structural weaknesses in public finances that, if unaddressed, could undermine sovereign creditworthiness, Fitch said in a statement during trading hours on Thursday. Fitch, currently has a BBB- rating on India, its lowest investment grade rating.

The market surged on Friday, 15 May 2008, on positive global cues. Telecom, IT and banking stocks led the rally. The Sensex jumped 300.51 points or 2.5%. Data showing fall in consumer price index in March 2009, also aided the rally. The market shrugged off a reduction in India's weight in the Morgan Stanley Capital International (MSCI) index.

Following changes to its indices as a part of a semi annual review by MSCI, India's country weight in the MSCI EM (emerging markets) Index will come down marginally from 6.47% to 6.36%. The change is effective from 29 May 2009.

India's consumer price index rose 8.03 % in March 2009 from a year earlier, lower than February 2009's annual rise of 9.63%, government data showed during trading hours on Friday, 15 May 2009. The consumer price index, which is published monthly, for industrial workers, remained steady at 148. The wholesale price index is more closely watched in India because it covers a higher number of products and is released weekly. Government data showed on Thursday 14 May 2009 the wholesale price index rose 0.48 % in the 12 months to 2 May 2009, below the previous week's annual rise of 0.7%.

Bank stocks jumped on hopes falling interest rates will boost lending growth. Bank interest rates are falling in India after the central bank began slashing interest rates last October to lift a slowing economy. The BSE's banking sector index Banked surged 6.1% in the week ended 15 May 2009.

State Bank of India announced a reduction interest rates on deposits by up to 50 basis points effective Monday, 18 May 2009.

India's biggest dedicated housing finance firm by operating income HDFC jumped 11.2% in the week on reports it is likely to cut deposit rates and follow it with a cut in lending rates.

India's biggest ready firm by market capitalization DLF rose 7.3% in the week after Macquarie Group raised the rating on the stock to 'neutral' from 'underperform', saying a large bulk deal by the founders has eased liquidity concerns. Founders of DLF raised Rs 3,860 crore by selling a 9.9% stake in realty major DLF to institutional investors on 13 May 2009.

India's biggest small-car maker in terms of market shares, Maruti Suzuki rose 2.1% in the week. The company on Friday, 15 May 2009, launched its premium compact car Ritz.

Two-wheeler major Bajaj Auto soared after the scrip was added to the MSCI India index as a part of a semi annual review by MSCI. The stock galloped 16.5% in the week