After the previous week's decline, markets started this week on a firm note. Positive global cues helped the indices to rally ahead on Monday and the Sensex ended more than 200 points higher. ONGC led the rally, ably supported by select engineering, telecom and auto stocks

The up trend continued on Tuesday as global markets remained firm. Cement and select banking stocks helped the indices while Jet Airways and Ranbaxy surged ahead

Banking stocks saw a sharp up move on Wednesday and all of them ended with significant gains. ICICI Bank led the gains while select stocks in FMCG and metals also found interest. Jet Airways continued its rally as the Sensex moved closer to 13000

Thursday saw a spectacular up move, once again led by the banking stocks. The Sensex and Nifty ended with gains of close to 3 per cent each as all frontline banking stocks ended with significant gains. ONGC surged 5 per cent while Reliance Industries provided good support. Telecom, engineering and auto stocks also found very good interest.

Indices consolidated on Friday after 4 days of sustained gains and ended modestly lower. Most of the big gainers in previous sessions saw some profit booking and ended lower. Higher crude oil prices and inflation which remained high also affected sentiment.

Sensex recovered a significant 856 points or 6.89 per cent for the week and the Nifty surged 252 points or 6.98 per cent over the week. The recovery came after the Sensex and Nifty corrected around 14 per cent each over the previous four weeks.

Mid-caps and small-caps also staged a good recovery. However gains were lower than the large caps as they underperformed during the middle of the week. CNX Mid-Cap 100 index closed the week with gains of 256 points or 5.57 per cent for the week.

Domestic economic and regulatory action

• Wholesale price inflation for the week ended 10 March remained steady at 6.46 per cent, marginally below consensus estimates of around 6.5 per cent. No clear trend was visible in price movements, with no particular segment showing any major change. While prices of some primary food articles and manufactured products went up, prices of select others declined. Inflation was at 3.8 per cent during the same week of previous year.

US markets, global economy and oil

• US markets rallied this week on hopes of an interest rate cut by the Fed before the end of the year and receding fears about the troubles of mortgage lenders spreading to other segments. Indices gained on most sessions of the week, except on Thursday when they ended without much change. The resurgence in oil prices helped stocks in that sector and pushed up the indices further.
  
  Frontline US indices saw their best weekly returns in nearly 4 years. The Dow gained 3.1 per cent for the week while the S&P 500 index rallied 3.5 per cent. NASDAQ ended with gains of 3.2 per cent for the week.
  
  
• At its policy meeting this week, the US Fed kept its key interest rate unchanged at 5.25 per cent as widely expected. More significantly, the Fed changed the language of its policy statement which many economists interpreted as a removal of the Fed's bias towards further tightening. Financial markets read the change as a shift to a more neutral policy stand and hopes of a rate cut before this calendar year end have increased.
  
  The Fed's assessment of the US economy is more muted than in previous policy statements, which may be another sign of a shift in policy bias. However, the Fed has not lowered its guard on inflation and has specifically mentioned that the possibility of price levels not moderating as expected remains its 'predominant policy concern'. Much would depend on US inflation in the coming months, which in turn depends heavily on energy prices.
  
  
• Data for the month of February has led to hopes that the US housing sector may see better days ahead. Housing has been the biggest drag on the US economy in recent quarters and any recovery is welcome news. Data released earlier this week showed that new housing starts increased in February while subsequent data showed an unexpected rise in sale of pre-owned houses. Though supply of houses available for sale increased, sales continued to rise for the third successive month. Going forward, more mortgage defaults would lead to a further rise in supply of houses and keep prices subdued.
  
  
• Crude oil prices rallied this week on forecasts of higher energy demand this year and worries about the further political tension in the Middle East. The UN is set to discuss sanctions on Iran for its failure to comply with directives on its nuclear programme. The Iranian president has cancelled his proposed UN visit, indicating a more belligerent stand. To make matters worse, Iran detained some British military personnel in the Gulf.
  
  Near month NYMEX futures surged over $5 per barrel over the week to settle at $62.28 per barrel on Friday.
  

*Disclaimer: The author may have positions in the stocks mentioned above at the time of writing this article. This analysis/report is only for the purpose of information and is not an investment advice. Readers are advised to consult a certified financial advisor before taking any investment decisions. While efforts have been made to ensure the accuracy of the information provided in the content the author or publisher shall not be held responsible for any loss caused to any person whatsoever.