Nifty regains Thursday's losses, closes above 5350

09 Apr 2010

The benchmark Nifty managed to recover nearly all of its Thursday's losses on the back of global cues and closed above the 5350 level. Same sectors, which dragged the markets down yesterday, pushed the Sensex 218 points higher at close. Banking & financial, capital goods, auto and metal (barring SAIL) were the major gainers along with heavyweight Reliance Industries.

European markets also bounced back sharply; trading 0.7-1% higher and the US index futures were marginally in the green. European Central Bank President Jean-Claude Trichet said Greece was not in danger of defaulting on its debt, which helped the markets to get back into positive territory today. Yesterday, Greece Credit Default Swaps (CDS) surpassed Iceland for the first time since 2005; CDS on Greece bonds jumped to 415 bps from 390 bps.

The US markets also ended off day's low on Thursday after same-store sales increased highest on record. US Same-store sales surged 9.1% in March, highest increase on record. Economists expected 6.3% increase. Asian markets ended higher; Hang Seng rose 1.56% and Shanghai went up 0.85%. Nikkei, Straits Times and Taiwan Weighted gained 0.3-0.4% while Kospi fell 0.5% today.

The 30-share BSE Sennsex closed at 17,933.14, up 218.74 points or 1.23% and the 50-share NSE Nifty went up 57.30 points or 1.08% to settle at 5,361.75. Among the benchmark indices, the BSE Midcap Index was up 0.9% and the Smallcap was up 1.3%.

Both the Sensex and the Nifty gained 1.3% each this week. Gaurav Doshi, Vice President, Equity Specialist for PMS at Morgan Stanley Private Wealth Management India said that in next two weeks, the markets would consolidate with different stocks and sectors, providing support to the broader market. "It is going to be stock and sector specific from here on,but the reason why we are skeptical is for two major observations. One is that IV is on the option side have come down to the lows of December 2006, we have not seen IVs as low as that. And second is open interest (OI) that has been the highest since January 2008. This clearly indicates massive amount of complacency in the market and that makes us skeptical and cautious."

However, he did believe that the Nifty would pullback post earnings or at least post most of the major earnings.