Markets surge as taper fears fade - Times of India

The author has posted comments on this articleTNN | Dec 21, 2013, 02.52AM IST

MUMBAI: With two major events—the announcement on the extent of tapering by the US Federal Reserve and the monetary policy review—behind, the markets surged ahead on Friday. The benchmark Sensex closed above the psychological 21000 mark while the Nifty ended the day at around 6180 points. The Sensex jumped 371 points gaining about 1.8% while the Nifty was up 107.6 points, a 1.74% increase.

"The markets have given a thumbs up to the tapering. The positive trend is likely to continue when we return to trade on Monday," said Gaurang Shah, assistant vice president, Geojit BNP Paribas Financial Services.

"With the two major decisions by central banks out of the way, markets will now be guided by further announcements of the taper and implementation of the same, political expectations and corporate performance," said Dipen Shah, head, private client group research, Kotak Securities.

Rate sensitive stocks were the major gainers during the day. The BSE Realty index was among the biggest gainers jumping 2.76%. The auto and banking indices increased 2% and 1.8% respectively. The market breadth was also positive. While 1528 stocks advanced, 978 stocks declined on the BSE.

Information technology (IT) stocks witnessed strong buying interest. Infosys (up 1.08%) and Wipro (3.6% increase) soared to their 52-week highs. The BSE IT index advanced 1.6%. Infosys became the second IT company after TCS to break into the Rs. 2 lakh crore market capitalisation club.

Incidentally, Infosys has seen two senior level exits in as many days. The announcement of the exit of V Balakrishnan, director of Infosys, was however made after the markets closed.

The BSE oil and gas index posted the biggest increase surging 3.83%. Index heavyweight Reliance Industries gained the most among Sensex stocks. The Reliance stock closed at Rs. 893.65, a 4.58% jump. Public sector oil and gas behemoth ONGC's stock was up 3.93%.

The benchmark indices ended the week about 1.25% higher buoyed by the RBI decision to hold rates. Positive foreign flows after the taper announcement also supported sentiments.

"Markets will also be influenced by economic readings on inflation/ IIP (index of industrial production) which will have a direct bearing on the future interest rate trajectory," Shah said. "With benchmark valuations at around the long-term average, greater visibility on growth will be a pre-requisite for further re-rating," he said. The markets however would be volatile as the F&O expiry would happen next week, observers said.

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