Sensex snaps 6-day losing streak, ends 338 points higher

Indian equities snapped a six-day losing streak on Wednesday led by a sharp pullback as markets looked oversold in previous sessions with the loss of around 1350 points on the Sensex. The Nifty added more than 100 points on heavy volumes; volume largely supported by F&O segment.

It's a pullback rally, says Nischal Maheshwari, Head Research at Edelweiss. He does not see any of the reasons gone away on macro front. "Whether it is in terms of inflation or a possibility of interest rate hike or possibility that the oil is going cross USD 90 in the current year. I think none of those things have gone away."

Disappointing industrial output data dragged the Sensex down over 100 points but the same news was shrugged off by the markets in the second half of trade, helped by positive global cues.

Industrial output in November grew at its slowest in a year and a half, partly on seasonal factors, and the Reserve Bank may stay on course to raise rates later this month to combat inflation. The 2.7% rise was way below than the street estimates of 6.29% and versus 10.8% growth in October.

Economists feel that the data is indicative that the Indian economy is going through a soft path. Samiran Chakrabarty, Head of Research, Standard Chartered Bank cautioned that that this 2.7% looks more like a 5% to 6% growth on a seasonally adjusted festive season adjusted kind of growth which is not great.

Echoing similar sentiment, Gaurav Kapur, Senior Economist, Royal Bank of Scotland said that overall growth momentum is likely to be affected next fiscal. According to Kapur, interest rates are going up across all categories and this will affect growth.