Sensex does an encore…Surges by another 300 pts

What a day to end the week! Frontline Indian stock indices finished with a big flourish, ending near the day’s high after opening at day’s low. The way morning session went hardly anyone would have bet on a second-half rally. But, markets have their own way of surprising investors. Today was one such day.

In the process, the Indian market capped one of its best weeks in recent memory. The BSE Sensex and the NSE Nifty notched their first weekly gains in five, notwithstanding a plethora of bad news. The Sensex is now close to 17,000 and the Nifty is back above the psychological 5,000 mark. Part of the bounce this week could be attributed to short covering as traders covered their bearish bets.



The BSE Sensex ended at 16,846, up 363 points or 2.2% over the previous close. It had earlier touched a day’s high of 16,888 and a day’s low of 16,428. It opened at 16,493.

The NSE Nifty was closed at 5,050, up 113 points over the previous close. It earlier touched a day’s high of 5,062 and a day’s low of 4,918. It opened at 4,940.

The market breadth was also positive today, as the broader indices too joined the party. The BSE Small-Cap index and the BSE Mid-Cap index were up by ~1% and ~1.4%, respectively.

Banking and Power indices were the top winners, up 3% each. Other prominent gainers were Metals, Teck, IT, Auto and PSU indices (up 2% to 2.5%). Realty, Capital Goods, Consumer Durables and Oil & Gas indices advanced by 1% to 2%. The Pharma and FMCG indices were up 1% or more.

"The good news is that FIIs have been net buyers in the last couple of sessions. Another encouraging tiding is that food inflation has softened lately. Hopefully, this trend will continue, giving much-needed elbow room to the RBI for keeping status quo on rates. Reduction in rates is still some time away though.

On the fiscal side, the Government has lost its plot. Disinvestment programme never took off. It is now hoping to return to the path of fiscal prudence in FY13. Meanwhile, the parliament gridlock continues over FDI in retail issue. The Centre is trying to persuade key allies and has ruled out a rollback of the Cabinet move.

Despite this week's strong advance, one must stay vigilant and cautious as a lot of uncertainty still prevails over a range of issues - domestic as well as global. The EU Summit next week will be an important event to keep an eye on," says Amar Ambani, Head of Research, IIFL.

The Indian indices managed to claw their way back after a soft opening and a largely lackluster morning session. Slight recovery in Chinese shares and a fresh spurt in European markets improved the undercurrent. German chancellor Angela Merkel’s remarks in parliament today lifted hopes of a lasting solution to the eurozone debt crisis.

US stock futures too were pointing at a strong opening on Wall Street even as investors awaited the latest data on the American jobs market. Market participants are hoping that the US nonfarm payroll data will reassure about the health of the US economy.

Asian markets closed mixed after the previous session's stupendous gains. The Chinese market was the top loser, down 1%. Taiwan benchmark also ended in red. The Nikkei in Japan rose marginally while the Hang Seng in Hong Kong finished flat.

Earlier, the Indian indices opened lower after the previous day's strong advance. Both the benchmarks were seen struggling for direction before recovering in the afternoon. Investors digested the latest macro-economic data from across the globe ahead of the widely tracked US monthly jobs report and important EU Summit next week.

Markets in the US and Europe fell overnight after registering sharp gains in the preceding session on the back of coordinated central bank action.