Re-energized bulls take benchmarks to six week highs; Nifty knocks doors of 5,000 levels

Boisterous benchmarks showcased an enthusiastic performance on Tuesday by rallying close to two percentage points and breaking a lot of psychological levels in their northbound journey. There appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt of fundamentally strong but oversold bargains. Frontline indices tested the psychological  5,000 (Nifty) and 16,500 (Sensex) levels in the session and met with stern resistance around those levels but managed to finish the session around highest levels in six weeks and settled above 4,950 (Nifty) and 16,450 (Sensex) levels as investors took to hefty across the board buying. Sentiments got bolstered amid indications of improving overall domestic macro-economic scenario and hopes that the government will employ a slew of investor friendly measures in the forthcoming budget in March, as the government looks to revive the economy without raising fiscal deficit. However, UP based sugar stocks remained in somber mood in the session after the Apex court directed the private sugar mill owners in the state to clear the dues of sugarcane growers. The encouraging earnings report from technology major HCL Technologies too lifted sentiments. Meanwhile, the rupee strengthened to the highest levels in around two months and even broke the psychological 51 mark on consistent dollar inflows and euro's gains against the US currency overseas. Leads from the Asian peers too remained heartening as markets in China rallied over four percent on hopes of monetary easing after the world’s second largest economy registered stronger than expected growth in the quarter ended Dec. 31. European counterparts too exhibited sanguine trends as investors focused on signs of improving global growth amid lack of any major market moving triggers.

Earlier on Dalal Street, the benchmark got off to a positive opening, tracking the sanguinity prevailing in Asian markets following successful French debt auction which alleviated concerns over the S&P’s downgrade of European nations. The frontline indices steadily gathered momentum thereon and commenced the northbound journey with great conviction. There appeared absolutely no signs of position squaring through the session as the indices kept conquering one psychological level after another. The journey halted only with the end of session around the highest point of the day which helped the bourses extend the gaining streak for third straight session. Eventually, the NSE’s 50-share broadly followed index Nifty, garnered close to triple digit gains to settle above the crucial 4,950 support level while Bombay Stock Exchange’s Sensitive Index – Sensex- amassed close to three hundred points and ended just below the psychological 16,450 mark. Moreover, the broader markets which traded in tandem with their larger peers for most part of the session settled with over a percent gains. On the BSE sectoral space, there appeared absolutely no evidence of selling as all the indices traded with notable gains. The Capital Goods counter one again remained the top gainer with about four percent gains followed by the Metal pocket which surged over three and half a percent. The markets jumped on stronger volumes of over Rs 1.40 lakh core while the turnover for NSE F&O segment also remained on the higher side as compared to that on Monday at over Rs 1.22 lakh crore. The market breadth remained extremely positive as there were 1907 shares on the gaining side against 975 shares on the losing side while 103 shares remained unchanged.

Finally, the BSE Sensex jumped 276.69 points or 1.71% to settle at 16,466.05, while the S&P CNX Nifty climbed by 93.40 points or 1.92% to close at 4,967.30.

The BSE Sensex touched a high and a low of 16,501.38 and 16,270.87 respectively. The BSE Mid cap and Small cap indices up by 1.34% and 1.07% respectively.

The major gainers on the Sensex were Maruti Suzuki up 10.48%, Hindalco Industries up 6.04%, L&T up 5.23%, Tata Steel up 5.00% and Reliance up 3.78%. While, Tata Power down 0.82%, ICICI Bank down 0.75%, GAIL down 0.44%, ITC down 0.38% and TCS down 0.28%, were the major losers on the index.

On the BSE sectoral space, Capital Goods up 3.73%, Metal up 3.66%, Realty up 3.46%, Oil & Gas up 2.79% and Auto up 2.62% were the top gainers, while there was no loser on the BSE sectoral space.

Meanwhile, even as the Union Finance Minister exuded confidence that the headline inflation would moderate between 6 and 7 percent by the end of fiscal year 2011-12, Pranab Mukherjee remained a bit apprehensive over only slight decline in manufacturing inflation and rate of price rise in the power group of items. According to the monthly inflation data, the index for manufactured products, which has weight of almost 65% in the wholesale price index (WPI), slipped only to 7.41% in December as against 7.70% in the previous month.

Finance Minister remained confident that moderation in inflation would continue in the coming months though softening in the prices of manufactured goods, despite the rapid decline in non-food primary inflation, may be more gradual. India’s headline inflation sank below the uncomfortable 9% levels for the first time since December, 2010 to the lowest levels in around two years to 7.47% in December, 2011. The sharp plunge in December headline inflation was mainly due to significant decline in inflation for primary articles including food inflation.

Mukherjee also underscored the fact that with encouraging November industrial production growth, the recent headline inflation figures point at improving overall macro-economic scenario in the second half of 2011-12 and with some policy measures this trend is likely to consolidate in the coming months.

The S&P CNX Nifty touched a high and low of 4,975.55 and 4,904.00, respectively.

The top gainers on the Nifty were Maruti Suzuki up 10.11%, Hindalco up 5.47%, JP Associates up 5.40%, L&T up 5.10% and Tata Steel up 4.98%.

On the flip side, Ranbaxy down 0.92%, ICICI Bank down 0.83%, GAIL down 0.52%, TCS down 0.37% and Dr Reddy down 0.19% were the top losers on the index.

The European markets were trading in green. France's CAC 40 up 1.42%, Britain’s FTSE 100 gained 1.00% and Germany's DAX surged by 1.72 points.

Asian markets ended firm on Tuesday following Chinese fourth quarter GDP data. For the Oct-Dec quarter, China's gross domestic product although at a 2.5-year low, was better-than-expected at 8.9%. This data showed the world's second largest economy grew at a faster pace than expected in the fourth quarter and helped soothe fears that Europe's debt-related problems will slow the Chinese economy. Other key Chinese data, including retail sales and industrial output, also beat estimates. Meanwhile a successful French bond sale and gains in European stocks also supported the market. However, the first major test of France's fiscal credibility comes on Thursday, when it attempts to sell between 7.5 and 9.5 billion euros' worth of longer term bonds.