Triumphant Tuesday...Nifty ends near 5200

The Tuesday Phenomena continued to create magic for a fifth week in a row with the main Indian stock indices ending near day's high. Just when one thought that the Indian markets could crack further after tumbling on Monday comes another spectacular Tuesday rally. After opening on a positive note, the equity benchmarks accelerated in the afternoon, especially towards the close of trade.

The BSE Sensex ended at 17,193, up 330 points from the last close. It earlier touched a day's high of 17,234 and hit day's low of 16,965.

The Nifty settled at 5,199, up 112 points. It hit a day’s high of 5,215 and day’s low of 5,120.



Today’s powerful bounce back was led by the Banking sector, with the BSE Banking index up almost 4%. The BSE Realty index was up 3.5%. The BSE Auto and Metals indices were close behind with a gain of more than 2% each.Teck, Oil & Gas and IT indices gained 1.5% to 2%. Power, Pharma, PSU, FMCG and Consumer Durable indices were up 1% or more. The Capital Goods index was up less than 1%.

The BSE Mid-Cap index rose ~2% while the BSE Small-Cap index gained 1.4%.

The market breadth was strong today. On the BSE, 1805 stocks advanced as against only 1003 declining stocks and 108 stocks remained unchanged.

The INDIA VIX on the NSE fell ~3.4% to close at 22.66. The index hit day's high of 23.46 and hit day’s low of 22.33.

Globally, the sentiment improved a bit amid reports that most EU leaders have agreed to strengthen a financial firewall against the debt crisis. Optimism is also growing over the ability of Greece to seal the deal with its private bondholders on the proposed debt restructuring to avoid a default.

The US is in better shape but Q4 GDP report was a tad disappointing. All eyes will be on Friday’s monthly jobs data. Before that we will get statistics on manufacturing PMI and services PMI from across the globe. The trajectory of China’s economy is also being tracked closely to see if it manages to engineer a soft landing.

On the domestic front, the news is not so good with the core sector growth for December decelerating from November. Results from some of the Indian companies have not been that encouraging. There have been few pleasant surprises as well but overall India Inc. is still hurting from the RBI's aggressive rate hikes, rupee's weakness, policy inaction and the global economic slowdown.

"The big question likely to be going through the minds of most market players is: "was January a flash in the pan?". The answer is a tricky one given the fact that a lot of the headwinds are yet to be conquered.

FII flows have been robust but may taper off in the absence of clarity on the policy front. Outcome of the state elections and the run up to the Union Budget are going to be crucial.

Watch out for the IIP numbers for December following a deceleration in core sector growth. Inflation data will also be very important in view of the RBI's monetary stance," says Amar Ambani.

Japan's Nikkei Average ended 0.1% up at 8,802.51. The Shanghai Composite index rose 0.3% while the S&P/ASX 200 index was down ~0.2%. The Hang Seng in Hong Kong was up ~1.1%.

The euro rose on hope of an impending deal on Greek debt, while the Japanese yen extended its ascent to approach record territory.

Greek Prime Minister Lucas Papademos said he was hopeful of a deal with private holders of Greece’s sovereign debt by the end of the week. Papademos’s comments had sparked short-covering, sending the euro higher.

A Financial Times report suggested strong demand from banks for the ECB's emergency funding program as prompting the euro short-covering.

European equity indices opened higher, a day after 25 out of 27 EU states signed up to a stricter fiscal discipline plan. Resource and bank stocks led the gains.

Markets are focused on media reports that European banks are getting ready to tap into the ECB's emergency funding plan for a second time.