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Expectations of good results from IT companies and FII buying in select sectors drove up the benchmark Sensex by 434 points on Wednesday.
Sensex closed up 2.25 per cent at 19696.86. The Nifty was up 2.17 per cent and closed at 5911.50.
Information technology companies are to announce results this week, starting with Infosys on Friday. TCS is scheduled to announce its results on April 21.
At Rs 25.60 crore, FIIs were net buyers on Wednesday on both the exchanges. Also, for April, the FIIs have been net buyers at Rs 2,211.37 crore.
“Though they have been net buyers, the FIIs have been churning funds — buying in some sectors and selling in some others,” said Mr Kishor Ostwal, Chairman and Managing Director, CNI Research.
The rally in the Sensex was led by the consumer goods sector which was up by 2.73 per cent, followed by auto (2.54 per cent), banking (2.32 per cent), FMCG (2.24 per cent) and IT (2.15 per cent).
“The morning session was dominated by IT stocks. However, afternoon saw the banking stocks doing well as banks are also expected to post good results this time,” said Ms Shanu Goel, Senior Research Analyst (Equity), Bonanza Portfolio.
HDFC Bank, whose results are expected on Monday, was up 3.30 per cent. ICICI Bank gained 2.67 per cent.
Analysts feel that in the short term, the market will move up as most of the negative news such as rising interest rates, weak IIP numbers and rising food inflation have already been factored in by the market.
“This spike is more of short-covering. The Nifty may go beyond 6000, but may not sustain at those levels,” said Mr Prakash Diwan, Head of Institutional Equity, Networth Stockbroking.
Domestic institutional investors (DIIs) were net buyers, albeit marginally at Rs. 4.8 crore.
“DIIs have not been aggressively investing in the market. When there are no redemption pressures, they turn sellers and when there are redemption pressures they turn buyers. But it is the retail participation, that has been most disappointing,” said Mr Ostwal.
Market experts say that retail investors have been absent from the market for the past one year. “For a brief period in November when markets touched 21,000-levels, retail participation was seen. But once the markets tanked, the retail activity weakened and they have stayed away since. They have missed the entire rally from 4800 – 6000 (for the Nifty),” said Mr Diwan.
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