Firm global markets and positive news flow triggered a solid rebound on the bourses on Thursday (14 December). The market is likely to extend that gains today tracking firm Asian markets and after Dow hit a record high on Thursday.
News that international rating agency S&P is looking to upgrade India’s sovereign rating and a surprise liberal 1:1 bonus issue by HCL Tech fanned bullish sentiment on the domestic bourses on Thursday as Sensex jumped 306 points to 13,487 and Nifty rose 77.85 points to 3,843.05.
According to dealers, Nifty has a strong resistance at 3,900-3,920 level. Only a decisive breach above that level would mark the resumption of the bull phase in the markets, according a technical analyst with a local brokerage. Nifty also has a strong support at 3,700 level, according to market participants. Key economic data due today is the weekly inflation data at 12:00 IST.
As per provisional data, FIIs were net buyers to the tune of Rs 480 crore on Thursday 14 December, the day when Sensex had surged 306 points. They were net sellers to the tune of Rs 96.90 crore on 13 December, the day when Sensex had gained 186 points.
FIIs were seen cutting cash-futures arbitrage positions in the recent market fall. Simultaneously, they pressed heavy sales in index-based futures. Their net sales in index-based futures in four trading sessions, between 8 December and 13 December, aggregated Rs 3,036 crore.
Mutual funds have pressed heavy sales recently. Their net outflow in three trading sessions between 11 December to 13 December totaled Rs 1439 crore.
After the latest industrial data, which spread fear of an economic slowdown, market men will now be closely eyeing advance tax payment by corporates for the third installment, due on 15 December 2006. The corporate advance tax payment will provide a broad outline of Q3 corporate results. More so, given that strong earnings growth has been a key driver of the bull-run on the bourses.
A section of the market expects sideways movement on the bourses in the coming days as, it is felt, FII participation will be limited on account of “year end” factor and volumes might take a hit. Foreign fund managers will be on a holiday for Christmas and year-end from middle of next week from about 20 December.
Asian markets were steady to firm on Friday following overnight gain in US stocks on Thursday. Key benchmark indices in Asia were up by between 0.12% to 1%.
US stocks surged on Thursday, driving the Dow industrials to a record close on strong earnings from companies such as investment bank Bear Stearns Company and an improving outlook for the U.S. economy. The Dow Jones industrial average gained 99.26 points, or 0.81 percent, while the Standard & Poor's 500 Index jumped 12.28 points, or 0.87 percent, to end at 1,425.49. The Nasdaq Composite Index finished up 21.44 points, or 0.88 percent, at 2,453.85. The Dow notched its 19th record close since the beginning of October, closing at 12,416.76, while the S&P 500 hit a six-year high.
Nymex crude was flat at $62.54 on Friday after a nearly 2 percent jump on Thursday caused by OPEC’s decision to cut production again.