Sensex, Nifty surge 4% last week; IIP, Inflation eyed

The world over, many stock markets clocked their best week in the last three months. The Indian market was no exception as global cues spurred the bulls to run that extra mile last week. Positive data emanating from US lifted market sentiment while an anticipation of a rate cut kept the momentum going.The 30-share index, Sensex climbed 764.71 points or 4.04% over previous week to 19,683.23. On the other hand, the broad based NSE Nifty surged 226 points, or 3.95%, to 5,945.7. Meanwhile, BSE Midcap and Smallcap index gained 2.63% and 2.23% respectively.

All sectoral indices settledpositive barring Consumer durables, which declined 2%. Top gainers in the BSE sectoral were Realty (7.42%), Bankex (5.50%), Capital goods (5.31%), Oil & gas (4.36%), IT (3.67%), Metal (3.6%), Teck (3.43%), Healthcare (3.09%), Auto (2.37%), FMCG (1.76%), PSU (1.87%) and Power (1.86%).

Commenting on the outlook, Amar Ambani, head of research, IIFL said, ''Recent weak trend in WPI has been followed by a dismal Q3 FY13 GDP growth of 4.5% (v/s 5.3% in Q2 FY13). IIP was negative for second consecutive month; another indication of weakening growth. Increase in average LAF borrowing from Rs 922 billion in Jan'2013 to Rs 1,098 billion in Feb '2013 indicates liquidity tightening in the system. These factors along with a need to revive investment cycle are likely to persuade RBI to consider growth over inflation. Thereby, we expect repo rate cut of 25 bps in the forthcoming monetary policy review." Rajesh Jain, EVP & Head Retail Research, Religare Securities said, ''In line with principle of inter market analysis, prevailing strength on global front added to positivity at our end. Technically, Nifty has formed bullish engulfing candlestick pattern on the weekly chart which indicates positive bias to continue in the near future. Considering the pace of inclination, we might see more of stock specific move in the coming days while index may witness muted performance with overall positive bias. Going ahead, 6,020-6,100 will be crucial resistance on the higher side while 5,800-5,870 will provide the need support in case of any decline.''