The stock market buzzed with optimism on a Goldman Sachs upgrade of Indian equities and renewed hopes of reforms picking up. Short covering also played its part in lifting the indices. The BSE Sensex crossed the 19,000-mark on Thursday after two months, closing at 19,170 — up 329 points or 1.8 per cent. The NSE Nifty closed at 5,825, up 98 points, or 1.7 per cent.

The NSE F&O segment posted a record volume of 3.03 lakh crore on settlement day of November contracts. NSE and BSE cash segments also witnessed 19,420 crore and 3,342 crore respectively, indicating a pick-up in trading interest.

The Goldman Sachs report holds out an improved outlook for the economy. “Three factors drive our relatively optimistic views: A decline in oil prices in real terms over the next few years, a more favourable external demand outlook, and domestic structural reforms which can ease some supply-side constraints,” it said.

Market analysts feel the Government has managed to side-step the threat of further downgrade with FDI in retail likely to go through at next week’s Parliament session. The Lok Sabha is set to discuss the issue on December 4 and 5. However, market analysts are not reading too much into the upside seen on Thursday as they feel it is mostly news-driven.

“The sentiment in the market is largely news-driven. As far as markets are concerned, they are disjointed from the underlying fundamentals. Rate-cuts are not happening in a big way. The investment cycle will take sometime to revive — perhaps a year or year and a half,” said Dhananjay Sinha, Co-Head Institutional Research, Emkay Global Financial Services.

Analysts also argue that the market, which had touched the lowest levels in May, has been rising steadily since June this year from the 16,000-mark to current levels. “Most positive news has been priced in by the markets anyway. People are still circumspect,” said Harendra Kumar, Managing Director, Elara Capital.

On Thursday, FIIs were net buyers at Rs 1,579 crore, while DII were net sellers at Rs 896 crore on both the exchanges. Retail investors on the BSE were net sellers at Rs 39 crore.

On the BSE, the realty stock index gained the most (3.4 per cent), followed by the banking sector index (up 2.8 per cent) and the auto index (up 2.1 per cent). .

sneha.p@thehindu.co.in

(This article was published on November 29, 2012)
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