Post session - Quick review

Last trading session of the week turned out to be an extension of the previous three, as barometer gauges garnering massive gains of over two percentage points, surpassed the boisterous psychological levels of 16800 (Sensex) and 5000 (Nifty) respectively. Prolonging previous session’s euphoria after major central banks took coordinated actions to lower dollar funding costs to European bank, in order to prevent a full-blown financial crisis, investor’s didn’t mind to go long for yet another session. Indian equity indices mirroring the style and pattern of world stocks rallied as investors welcomed German Chancellor Angela Merkel’s call for changes to the European Union treaty to enforce stern fiscal discipline. In a highly anticipated speech to Germany’s parliament, Merkel said the 17 nations that use the euro currency must urgently move to restore market confidence. She also previewed the strategy that she will present at an upcoming emergency EU summit.

Back home, dovish comments from chief economic adviser to the finance ministry, Kaushik Basu, also spurred some buying at Dalal Street. Kaushik Basu said, India's slowing economy is likely to pick up in the January-March quarter. However, he added that, “investment will have some impact over the next year”. As per the data released on Wednesday, Asia's third-largest economy grew at 6.9 percent in the quarter to end-September, much slower than 7.7 percent growth in the previous quarter.

However, sanguine global leads mainly aided benchmarks to take forward their northbound journey to next level. Overnight, US markets made a mixed close on flat note. Meanwhile, data which suggested that US economy expanded at a moderate pace in all, also spurred buying in beaten down metal and IT space. However, banking gauge was up with mesmerizing gains of over 3%, the top gainer on the BSE Sectoral chart. Banking index, was gained for second straight session on report by global rating agency S&P’s which affirmed investment grade with stable outlook to ten Indian banks - SBI, Axis Bank, Bank of India, HDFC Bank, ICICI Bank, IDBI Bank, IOB, Syndicate Bank, UBI and Indian Bank. 

However, mostly positive close of Asian shares gave additional boost up to benchmark indices. But some Asian pacific markets like that of Shanghai Composite, Jakarta Composite, and Taiwan Weighted took a pause as investors cashed in some gains and looked ahead to a key European summit next week for more progress on tackling the euro-zone debt crisis. With monthly US payrolls data due later in the day and an important European summit on December 9, investors were wary of adding large positions going into the tricky year-end period. Meanwhile, European shares which rallied on Friday, boosted by optimism over a solution to the eurozone debt crisis, too added to the already over-joyous mood of Dalal Street.

Back home, 30 share barometer gauge -Sensex- on BSE amassing close to 400 points ended the week above the 16800 level. In the similar way, 50 share broadly followed index-Nifty-on NSE gathering over 100 points snapped the session above the psychological level of 5000 mark. The broader indices, also gaining sufficient traction for the day, went home with gains of over 1%.The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1673:1089 while 148 scrips remained unchanged.

The BSE Sensex gained 404.07 points or 2.45% and settled at 16,887.52. The index touched a high and a low of 16,887.52 and 16,428.66 respectively. 29 stocks advanced against 1 declining ones on the index (Provisional)

The BSE Mid-cap index gained 1.53% while Small-cap index was up by 1.12%. (Provisional)

On the BSE Sectoral front, Bankex up 3.55%, Power up 3.22%, TECk up 2.80%, IT up 2.71% and Metal up 2.40% were the top gainers while there were no losers.

The top gainers on the Sensex were Tata Power up 6.30%, Tata Motors up 4.76%, SBI up 4.27%, TCS up 3.90% and Tata Steel up 3.87%.

On the flip side, Hero MotoCorp down 0.57% was the only losers on the index. (Provisional)

Meanwhile, Finance Minister Pranab Mukherjee has lowered the economic growth projection to around 7.5% for the current financial year from his budgetary estimate of 9% on the back of sharp decline seen in the economic growth in the second quarter of 2011-12. Mukherjee said, 'I am modest, I am not saying that I will be reaching the figure which I projected earlier during the budget -- 9% plus minus 0.25%. I am reducing it at around 7.5%.'

In the first quarter of the current financial year, the gross domestic product (GDP) growth declined to 7.7% and it further declined to 6.9% in the second quarter. As a result, in the first six months of the current financial year, India’s economic growth slumped to 7.3% from 8.85% in the same period of last financial year.

Mukherjee said the government was not in a position to boost growth through stimulus as it did during the global financial crisis in 2008-09. However, by adding further he said that certain policy changes can improve the situation little bit which we are doing.  He also expressed his hope that the government would be able to make national consensus on key economic reforms, which are crucially important to boost the economic growth.

The stimulus packages had helped the Indian economy recover from the global financial crisis in 2008-09. 'At that time, through three stimulus packages we could generate domestic demand and provide some support to industrial sector through which the process of deceleration was checked dramatically and we ended the year with a growth of 6.8% in 2008-09,' Mukherjee said.

He also said the projection of around 9% growth for the current financial year was based on the kind of recovery and resilience the Indian economy showed in 2008-09 and in the subsequent years.

India VIX, a gauge for market’s short term expectation of volatility lost 4.11% at 23.99 from its previous close of 25.02 on Thursday. (Provisional)

The S&P CNX Nifty gained 123.85 points or 2.51% to settle at 5,060.70. The index touched high and low of 5,062.55 and 4,918.40 respectively. 48 stocks advanced against 2 declining ones on the index. (Provisional)

The top gainers on the Nifty were Ambuja Cement up 8.10%, Tata Power up 6.51%, BPCL up 5.48%, IDFC up 5.08% and Tata Motors up 4.81%.

On the other hand, Hero MotoCorp down 0.52% and Ranbaxy down 0.26% were the only losers. (Provisional)

The European markets are trading in green, with France's CAC 40 up 1.67%, Germany's DAX up 1.48% and FTSE 100 up 1.58%.