Stocks: The BSE benchmark Sensex ended the week above 20,000 after two years due to strong buying mainly in refinery, realty and PSU sectors on the back of partial deregulation of diesel prices and the Government's decision to defer the implementation of controversial anti-tax evasion proposal GAAR.
Rate cut hopes by RBI in its monetary policy meeting on January 29 after a fall in inflation, as measured by Wholesale Price Index (WPI), to three-year low and persistent foreign funds inflow into equities also boosted the market.
Comments from the Finance Minister about immediate priority of the Government to keep the investment cycle going, too, aided the upsurge.
The 30-issue Sensex jumped 243 points on Monday, its best single-day gain in the current calender year, on all- round buying as Government deferred implementation of the General Anti-Avoidance Rules (GAAR) by two years, from April 2014 to to April 2016, and a fall in inflation in December.
The BSE benchmark resumed higher at 19,689.09 and shot up further to a high of 20,126.55 before ending at 20,039.04, a gain of 375.40 points, or 1.91 per cent, its best level since January 6, 2011.
The NSE 50-share Nifty also rose by 113.10 points, or1.90 per cent, to end at over two-year high of 6,064.40.
"The partial decontrol in diesel prices triggered a rally in oil marketing companies," said Amar Ambani, Head of Research at brokerage IIFL.
The move to allow hike in diesel prices periodically to a maximum of 0.50 paisa per month would enable OMCs to cut their under-recoveries, thereby reducing the burden of fiscal deficit of Government. It will also reduce the oil subsidy bill, where diesel accounts for 59 per cent of total subsidy.
Refinery counters like IOC, ONGC, BPCL, OIL, HPCL and RIL zoomed between 7.11 per cent and 22.83 per cent. As a result, the BSE-Oil&Gas flared up by 10.96 per cent and was the top gainer from the sectoral indices.
Drop in WPI-based inflation to a three-year low of 7.18 per cent in December also triggered buying in stocks.
Buying was so strong that stock markets ignored data showing that retail inflation rose to 10.56 per cent in December from 9.90 per cent in November.
Foreign Institutional Investors (FIIs), the main market driver, remained net buyers throughout the week, investing a net Rs 4,977.79 crore, including the provisional figure of January 18.
The market ended in the green on four out of five trading days. On Wednesday, it had dipped by 169 points as rate cut hopes were dented by RBI Governor D Subbarao's view that inflation is "still high".
The rally was also attributed to approval of 50 per cent reduction by the Government in reserve price of spectrum used by CDMA operators and good third quarter results announced by some major corporates.
Thirteen out of 30 Sensex scrips ended with gainswhile others finished with losses. Second-line counters, however, underperformed the sensex, indicating lack of any major retail investments. The BSE-Small cap index settled down by 1.13 pct while the BSE-Midcap was up by a mere 0.12 pct.
State-run oil and gas major, ONGC, was the top gainer in the Sensex pack with a rise of 15.58 per cent. Petro-chem giant Reliance Industries (RIL) gained 7.11 per cent. Other gainers from the sensex pack were NTPC (7.67 pct), Bharti Airtel (7.38 pct), GAIL India (5.51 pct), ITC (4.95 pct), TCS (3.43 pct) and Infosys (2.85 pct).
However, M&M dropped by 5.90 pct, followed by Wipro 5.33 pct, Hero MotoCorp 3.75 pct, Sun Pharma 3.52 pct, Hindalco 3.38 pct, Sterlite Ind 2.91 pct, Bajaj Auto 2.88 pct, Cipla 2.80 pct, Jindal Steel 2.15 pct, HUL 1.70 pct, Coal India 1.59 pct and Maruti Suzuki 1.29 pct.
Among other sectoral indices, the BSE-Realty spurted by 7.33 pct, BSE-PSU 4.67 pct, BSE-Teck 2.82 pct, BSE-IT 2.45 pct and BSE-Power 1.75 pct while BSE-Auto dropped by 2.88 pct, BSE-Metal 1.44 pct and BSE-HC by 0.89 pct.
The total turnover at BSE and NSE was at Rs 12,288.25 crsand Rs 66,915.11 crs respectively as against the last week's level of Rs 13,452.18 crs and Rs 64,590.39 crs.
Forex: The Indian rupee extended its gains for the second week in a row and flared up by 105 paise to close the week at 2-1/2-month high of 53.71 against the Greenback on strong local equities triggered by delay in the implementation of controversial GAAR by the government and a fall in wholesale inflation for December boosted rate cut hopes.
Sustained dollar selling by exporters and some banks amid continued foreign funds inflow in local stocks also kept the rupee firm.
At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed the week a tad higher at 54.75 as against last weekend's close of 54.76, but touched a low of 54.88 at mid-week on fresh dollar demand from importers and some weakness in capital markets on Wednesday.
Later, it bounced back with a vengeance after the government allowed oil marketing companies (OMCs) to hike diesel price in small quantum periodically, which might help to recover their under recoveries and reduce the burden of fiscal deficit of the government.
The rupee then touched an intra-day high of 53.70 before concluding at 53.71 --highest closing since November 1, 2012, showing a rise of 105 paise, or 1.92 pct. Last week, it had risen by 31 paise, or 0.56 pct.
The Indian benchmark sensex closed the week sharply up by375.40 points, or 1.91 pct, while FIIs injected USD 697.34 mln in the first four days of the week.
On Monday, the governent said that it has postponed implementation of controversial General Anti-Avoidance Rules (GAAR) by two years to April 1, 2016, which was aimed at checking tax avoidance by overseas investors, giving a big relief to these foreign investors.