Investors had enough reasons to turn bullish on Friday and build on the gains of previous session. They not only covered short positions in interest sensitive sectors, but made fresh purchases in select blue chips.
After market hours on Thursday, government data showed India’s inflation for the week ended July 5 had risen to 11.91 per cent, higher from previous week's 11.89 per cent. The figure came as a surprise for the market which was expecting it around 12 per cent. Add to this, a statement from the Department of Economic Affairs that inflation had ‘stabilised’ was morale booster.
Mood in US financial market, which has been under pressure due to credit crisis, turned positive after lender JP Morgan Chase announced better than expected results.
US stocks rallied overnight also as oil prices dropped sharply. The Dow Jones Industrial Average surged 1.85 per cent, Standard & Poor's 500 Index rose 1.20 per cent, and Nasdaq Composite Index climbed 1.20 per cent.
Steep fall in crude oil prices, a major concern for global economies, further strengthened sentiment. Oil hovered above $130 per barrel on Friday, after correcting more than 10 per cent in just three days from the record high of $147.27 on July 11. Rally in European markets also gave investors a chance to build on. FTSE 100 was higher by 1 per cent, DAX 30 up 1.79 per cent and CAC 40 added 0.79 per cent.
“Oil prices have come down and inflation figures were on expected lines. So far companies have announced good quarterly results. Many market participants have discounted outcome of vote of confidence and feel that the government will be able to scrape through. These all factors led to rally in the market,” said Rahul Sanghvi, institutional sales, Kantilal Chhaganlal Securities.
Bombay Stock Exchange’s Sensex closed at 13635.40, up 523.55 points or 3.99 per cent. It touched a high of 13684.27 and low of 13093.34. National Stock Exchange’s Nifty ended at 4092.25, up 3.67 per cent or 145.05 points. The broader index touched a high of 4,110.55 and low of 3,926.30.
“Selling by FIIs has reduced a bit and local mutual funds have initiated buying in blue chips like Larsen & Toubro, Tata Steel, Reliance Industries and Infosys Technologies. Valuations of most stocks look attractive at current levels,” Sanghvi added. Tier II and III stocks under performed the benchmarks as BSE Midcap Index closed 1.63 per cent high at 5239.39 and BSE Smallcap Index ended 1.08 per cent up 6,455.89.
Biggest Sensex gainers were ICICI Bank (12.46%), HDFC (10.13%), Jaiprakash Associates (8.86%), HDFC Bank (7.54%), Bharti Airtel (7.5%) and DLF (6.51%). Losers comprised Satyam Computer (-7.5%), Wipro (-4.42%), Ranbaxy Laboratories (3.72%), Tata Steel (3.38%) and Infosys Technologies (1.51%). Market breadth on BSE showed 1,608 advances and 985 declines, while on NSE, there were 849 gainers and 349 losers.
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