Markets close strong led by telecom, cap goods, auto, banks

24 April 2009

The benchmark indices closed on a strong note and extended the rally for the second consecutive day. Buying in shares of telecom, capital goods, private power, auto and select cement companies helped the indices to post strong gains followed by broader indices. The markets were lacklustre in the first of the session and this rally started in the second half of the trade.

Domestic funds were aggressive buyers in today's trade. Incremental flows from FIIs were too positive and long only funds were buyers in large cap stocks.

Telecom stocks showed stunning performance and gave strong support to the indices, as a leading FII was accumulating large cap telecom stocks like Bharti and Idea Cellular, which were up 5.47% and 4.76%, respectively. Reliance Communication gained 3.57%.

However, dealers said volatility is going to rise ahead of the expiry next week and expect the Nifty expiry at around 3500 levels.

The 30-share BSE Sensex closed 194.06 points or 1.74% higher at 11,329.05 and the 50-share NSE Nifty rose 1.67% or 57.05 points, to settle at 3,480.75. The broader indices also ended in line with the benchmark indices - CNX Midcap was up 1.68%, to 3959.80 and BSE Smallcap Index closed at 4,068.26, up 68.48 points or 1.71%.

Sean Darby of Nomura International believes the bear market that existed last year has been broke out off and does not expect a retest of the lows. He sees a shallow economic recovery and higher inflation. Darby expects a sticky consumer price index going forward. He believes inflation in the third and fourth quarter of FY10 would be high on the back of higher food and fuel prices.