Sensex ends at 3.5-month high; Bank Nifty up 3.5%

It was a bulls' party on the street today. Consistent inflow of foreign money and falling inflation raised hopes for rate cuts which may have contributed to today's rally. This helped the benchmarks stay above psychologically important levels and closed at a three and half months high.

The Sensex rose 353.84 points or 1.98%, to close at 18,202.41 and the Nifty gained 114 points or 2.1%, to end at 5,531.95. In the year 2012, respective benchmarks rallied over 17.5% and 19%.

Foreign money played a key role in the current year. FIIs pumped in more money in the first half of the February itself as compared to January flow. They bought Rs 11,089.30 crore worth of equity shares in January. After looking at today's upmove in largecaps and midcaps, it seemed to be crossing Rs 12,000 crore today.

Hans Goetti of Finaport expects India to outperform other Asian markets for the year. "Markets across Asia are witnessing a liquidity driven rally," he says.

"ECB showed the willingness to expand their balance sheet by almost unlimited amounts. That liquidity finds its way into asset markets and one of the beneficiaries are emerging markets, where returns are potentially the highest," he reasoned.

He believes, India is relatively well positioned within Asia from a valuation and sentiment perspective to benefit from this rally. He expects India to outperform other Asian markets for the year.