The benchmark index gained for the fifth time in six days as global markets continued their winning streak. But the gains were limited and the markets were very volatile as economic worries and uncertainties related to upcoming general elections weighed on investor confidence.
“We are not seeing large amounts of buying into the markets yet. The markets are witnessing a bear market rally. The macro factors still indicate a subdued global economy,” said Nilesh Shah, MD and CEO, Envision Capital.
The Sensex opened firm on the back of an extended rally on the Wall Street, which gained for a sixth time in seven days on the Fed's surprise move. At one point of time, the Indian benchmark index had surged to 9,086 before profit booking took it into the red. A late recovery spurred by oil & gas and IT stocks helped the Sensex close higher at 9,001.
The US central bank said on Wednesday it would pump more than $1 trillion into the economy with plans to buy up to $300 billion long-term government bonds and some $750 billion in mortgage-backed securities, which would help revive the country's sagging housing market. The Fed move also helped Asian markets to mostly close higher.
In the Indian markets, realty stocks were the biggest gainers of the day. Akruti City surged over 10 per cent while Indiabulls Real Estate advanced over 3 per cent.
IT stocks also saw good buying support, particularly in the midcap space. MindTree surged over 30 per cent while NIIT Ltd and Firstsource jumped over 15 per cent each. Despite this analysts remain guarded on IT sector. “The environment for the IT sector remains challenging in FY10 and I see operating challenges and pricing pressures in IT sector,” Nilesh Shah said.
During today’s trading session, the inflation numbers were announced but the markets reaction was muted. The inflation rate sharply fell sharply to its all-time low of 0.44 per cent for the week ended March 7. This raises the possibility of India experiencing a technical deflation in the near future. “The inflation fell significant due to a base effect and I feel that the negative inflation will not impact Indian economy,” Shah said.
In the 30-stock Sensex pack, 19 stocks gained while 10 stocks ended in the losing side. And one stock, Hindalco, ended unchanged. Sterlite Ind led the gainers with over 4 per cent rise, while HDFC and Sun Pharma gained over 2 per cent. Heavyweight RIL ended 1 per cent up at 1,344. The laggards were led by capital goods stocks L&T and BHEL on concerns over a squeeze in new orders. Both the stocks fell over 3 per cent each.
Asian stocks were mostly higher on Thursday on guarded optimism the US Federal Reserve's $1.2 trillion spending plan would bring a quicker end to the worst global slowdown in decades. But Japanese exporters got whacked as the dollar tumbled against the yen. The European markets were also firm in the early trade.
In Tokyo, the Nikkei 225 stock average lost 26.21 points, or 0.3 per cent, to 7,945.96 as the Fed's action weighed on the dollar.
Mainland China's Shanghai index rose almost 2 per cent, while benchmarks in Australia, Singapore, Malaysia and Thailand all advanced.
