Robust week for Sensex in two years of slump

BSE index gains 805 points in 4 days

The country’s stock market enjoyed one of its best weeks in the two years of economic downturn as the BSE Sensex recorded four consecutive days of impressive gains this period after shedding over 290 points in response to Union Finance Minister P Chidambaram’s Budget on February 28. 

On Friday, the fourth consecutive session of market rebound, the BSE Sensex gained 270 points (1.39 per cent) higher over the previous day to end the week at 19,683 points. The Sensex gained 805.27 points or 4.26 per cent in four trading days from a low of 18,877.96 on Tuesday.

The unusual buoyancy may not necessarily be any indication of early economic recovery in the country. But market analysts attributed the stock market gains to several optimistic developments both in the country and at the international level.

Chidambaram’s promise on further containing the government’s gross borrowings to restrict fiscal deficit and inflation coupled with Chief Economic Adviser Raghuram Rajan’s positive outlook on GDP growth for fiscal 2013 may have helped the market rally since Tuesday. Market experts though are not sure for how long.

There are also expectations of an interest rate cut by the Reserve Bank of India in its policy review later this month. Earlier this week, Chidam­baram had also made a strong case for rate cuts to ease the flow of investments.

Analysts maintained that a firming global trend on the back of data from the US and China added to positive signs that the global economy is recovering, which further supported the market.

The US has just reported an impressive job creation at home for February—almost 2.5 lakh jobs in one month—bringing down the national unemployment rate. There were also positive tidings from China. Chinese exports data for February suggested increasing demand for Chinese goods and a rebound in the global economy.

Investor sentiment on Dalal Street was also boosted on Friday by data showing that foreign funds remained net buyers of Indian stocks on Thursday, when FIIs bought shares worth a net Rs 630.47 crore, as per data available with the bourses.

Kotak Securities’ Dipen Shah said that positive global cues and expectations of further reforms from the government have contributed to improving investor sentiment. India Infoline's Amar Ambani said many stock markets worldwide have clocked their best week in the last three months. Key benchmark indices in France, Germany and the UK, Japan, Taiwan, South Korea, and Hong Kong, too, were up.

“The Indian market was no exception as global cues spurred the bulls to run that extra mile on Friday,” he said. Investors expect a repo rate cut of at least 25 basis points in the upcoming monetary policy review.