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Encouraged by the rally in the European markets, the Indian markets on Friday picked up in the afternoon session on brisk FII end-of-year buying.
The Sensex closed at 16,846.83, up 363.38 points or 2.2 per cent from its previous close, while the Nifty gained 113.30 points or 2.29 per cent to end the day at 5,050.15.
It was after the European markets opened that Indian stocks started their climb northwards.
According to analysts, this has been a good week for the markets. “After four consecutive weeks of negative closing, the markets have finally closed on a high. This was largely driven by news from Europe and because of FII movement,” said Mr Rikesh Parikh, Vice-President – Equities, Motilal Oswal Securities.
The European markets, which were still trading at the time of going to the press, were up by around two per cent. Market experts believe that going forward the Indian markets are likely to be guided by European action.
Foreign Institutional Investors for the past two days have been net buyers. FIIs were net buyers of equity for Rs 687 crore on Thursday and for Rs 597 crore on Friday. December is a crucial month for FIIs, say analysts, as it is closing month of their fiscal year.
“Several foreign funds were buying stocks as it is the closing month for them. It is nothing but window-dressing for their NAVs,” said Mr Alex Mathew, Head of Research, Geojit BNP Paribas Financial Services.
While Europe and FII action were the dominant reason for the rally in the market, the rupee's appreciation against the dollar, expectation of positive US employment and non-farm pay roll data, and short-covering in the banking, auto and metal sectors added to the positive mood.
The rupee appreciated against the dollar on Friday by 0.5 per cent to Rs 51.2. A CRR rate cut is also expected in the near future, said marketmen.
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