Markets zoom

Indian equity indices rallied on Monday, with the BSE Sensex jumping by nearly 600 points and the NSE Nifty ending above the 4,900 mark. The Sensex and the Nifty closed near their intraday highs on the back of short covering and some bargain hunting following the recent drubbing.

Finally, the BSE Sensex ended at 16,416, adding 567 points. It had earlier touched a day's high of 16,462 and a day's low of 15,068. It opened at 16,080. The NSE Nifty closed at 4,919, adding ~171 points.





The sentiment was buoyed by the weekend settlement between the Government and Team Anna over the Lokpal Bill. Anna Hazare broke his 12-day public fast on Sunday morning after the Parliament on Saturday accepted his three main demands to be incorporated in the Lokpal Bill.



The Parliament’s resolution on Saturday after a constructive discussion has fueled expectations that a few key reform bills may get cleared soon.

It may be recalled that last week, the Indian market had under-performed the global counterparts amid concerns about the political impasse over the Lokpal Bill. Traders and investors didn’t want to carry bullish bets over the weekend.



“With the resolution of the Lokpal logjam, the sentiment today improved dramatically. The key indices opened with a gap, tracking a firm trend across Asian markets and gains in the US markets on Friday. There was no looking back after that; in fact, the market kept on scaling new intraday highs.



Banks, IT, Realty and Metal stocks had been battered badly in the recent selloff and therefore were among the leading gainers today. Defensives such as Pharma, PSU and FMCG stocks under-performed today,” says Amar Ambani, Head of Research, IIFL - India Private Clients.


Markets will digest and dissect a lot of data points this week, including US jobs report on Friday. For India, it is a truncated trading week, as markets will be shut on Wednesday and Thursday. Q1 GDP data will be out on Tuesday. Q1 FY12 GDP is estimated to be around 7.5% compared to 7.8% in the last quarter of FY11. India's economic growth stood at 8.5% during FY11, compared to 8% in the previous fiscal year.


India has underperformed global markets lately, which is a cause for concern. But, FIIs were not heavy sellers on Friday. The Indian market can stage a comeback if FII outflows reverse and overseas markets recover some more ground.

Most Asian stock markets closed with solid gains on Monday, tracking the advance in their US counterpart on Friday, even as Federal Reserve Chairman Ben S. Bernanke refrained from announcing any new monetary stimulus.

However, stocks in China were down, under-performing other regional peers, after its central bank asked banks to hold more types of deposits in reserves, effectively tightening credit conditions further.

The Shanghai Composite index was down 1.4% at 2,576.

The Nikkei in Japan pared gains after the ruling Democratic Party picked Finance Minister Yoshihiko Noda to replace Naoto Kan as the new prime minister. It ended up 0.6% at 8,851 after being as high as 8,926.

Other regional stock indices posted stronger gains, rising by 1-3% led by the Kospi in South Korea.

European stock markets opened sharply higher today, but trading was light due to a trading holiday in London markets. European equities also benefited from an advance on Wall Street on Friday following Bernanke's address at the Jackson Hole summit.

Greek stocks spurted on the heels of reported merger talk between the debt-plagued nation's two big banks. The main index in Athens rallied ~12% after EFG Eurobank Ergasias SA and Alpha Bank SA are said to be planning a merger.