RALLY CONTINUES

A session after staging a marvelous performance, Indian benchmark indices managed to pull through yet another strong rally on Thursday, thanks to the hefty short covering in the beaten down rate sensitive counters that prevailed for second straight session. The psychological 4,650 and 15,500 levels proved as strong supports for the benchmarks as they bounced over two percentage points from around those levels after investors hunted for badly beaten down but fundamentally strong bargains on getting encouraging domestic economic report and on optimism in European markets. Market participants rejoiced as government released weekly inflation data which showed that India's food inflation plunged to a near four-year low to 1.81% for the week ended December 10 from 4.35% in the previous week. On the global front, most markets in the Asian region exhibited pessimistic performance however, the European markets bucked the trend and rose, buttressing domestic sentiments. Investors also were optimistic ahead of the release of US consumer confidence and initial jobless claims data, which are likely to highlight the improving economic situation in world's largest economy. Meanwhile, sugar stocks including Shri Renuka Sugars and Bajaj Hindustan surged higher in the session after Food Minister said that the government is contemplating demands for partial decontrol of the sector while he also assured that he would take up the issue with Finance Minister and Agriculture Minister after Parliament's winter session. While software and technology counters bucked the optimistic trend after dismal results from Oracle Corp, the world's No.3 software maker raised concerns over the prospects of domestic companies too. While jitters in IT stocks also were evident since a bipartisan bill has been tabled in the US House of Representatives to make companies that move call centres overseas ineligible for grants or guaranteed loans from the federal government.
Earlier on Dalal Street, the benchmark got off to a somber opening following unsupportive leads from Asian markets as worries over Euro-zone's sovereign debt woes once again caming to the fore. The frontline indices kept oscillating in a narrow range through the morning trades. The key gauges hit intraday lows in early afternoon trades after which the indices witnessed sudden spurt in sentiments which helped them to capitalize on the impetus and settle around the highest point of the day, extending the gaining streak for a second straight day. Eventually, the NSE's 50-share broadly followed index - Nifty garnered close to a percentage points to settle above the crucial 4,700 levels while Bombay Stock Exchange's Sensitive Index - Sensex amassed whopping over a hundred points and closed above the psychological 15,800 mark. Moreover, the broader markets too matched the fervor with which their larger peers rallied and closed with gains of around a percent. On the BSE sectoral space, the beaten down rate sensitive Realty counter remained the top mover in the space with close to three percent gains while the Bankex pocket too made its presence felt by surging over two percent. On the flipside, the IT and TECk counters remained the only chinks in the armor and settled with over a percent losses each. The markets climbed on stronger volumes of over Rs 1.69 lakh crore while the turnover for NSE F&O segment too remained on the higher side as compared to Wednesday at over 1.56 lakh crore. The market breadth was optimistic as there were 1547 shares on the gaining side against 1149 shares on the losing side while 147 shares remained unchanged.
Finally, the BSE Sensex garnered 128.15 points or 0.82% to settle at 15,813.36, while the S&P CNX Nifty amassed by 40.70 points or 0.87% to close 4,733.85.
The BSE Sensex touched a high and a low of 15,834.63 and 15,472.70 respectively. The BSE Mid cap and Small cap indices were up by 0.78% and 0.70% respectively.
The major gainers on the Sensex were DLF up 4.80%, Tata Motors up 3.76%, ICICI Bank up 3.52%, SBI up 2.79% and Tata Power up 2.36%. While, Wipro down 2.67%, Bharti Airtel down 1.77%, Infosys down 1.07%, Coal India down 0.96% and TCS down 0.94%, were the major loser on the index.
On the BSE sectoral space, Realty up 2.91%, Bankex up 2.27%, Power up 1.97%, Consumer Durables up 1.85% and PSU up 1.73% were the major gainers while IT down 1.20% and TECk down 1.10% were the only losers on the BSE sectoral space.
Meanwhile, India's weekly food inflation, measured by the Wholesale Price Index (WPI), sliding for sixth successive week, cooled off to a nearly four-year low of 1.81% for the week ended December 10, its lowest rate since the week ended February 9, 2008, when it stood at 2.26%. The decline was mainly on the back of declining prices of essential items like vegetables, onion and potato.  Food inflation was 4.35% in the previous week. It had stood at 13.22% in the corresponding week of 2010.
According to the data released by the Ministry of Commerce and Industry, the index for 'Food Articles' group declined by 0.5% to 191.0 (Provisional) from 191.9 (Provisional) for the previous week to lower prices of fruits and vegetables and condiments and spices (2% each) and ragi, tea and rice (1% each).  However, the prices of jowar, gram and masur (2% each) and fish-inland, poultry chicken and fish-marine (1% each) moved up.
The index for 'Non-Food Articles' group declined by 0.6% to 177.4 (Provisional) from 178.4 (Provisional) for the previous week due to lower prices of flowers (13%), cotton seed (7%), sunflower (4%) and coir fibre,  copra  and gingelly seed (2% each). However, the prices of gaur seed (5 %), soyabean (4%), raw silk (2%) and linseed, raw rubber, castor seed, rape and mustard seed and groundnut seed (1% each) moved up.
As a result the index for 'Primary Articles' which accounts for 20.12% of the WPI declined by 0.2% to 197.7 (Provisional) from 198.1 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 3.78% (Provisional) for the week ended December 10, 2011 as compared to 5.48% (Provisional) for the previous week ended December 3, 2011.
Meanwhile, the index and annual rate of inflation calculated on point to point basis for 'Fuel and Power' group, which accounts for 14.91% of WPI, remained unchanged at their previous week's level of 172.4 (Provisional) and 15.24% (Provisional) for the week ended December 10, 2011.

The sharp fall in food inflation numbers, which were in double-digit till the first week of November are seen as a big relief to both the government and the Reserve Bank who have been battling high prices for over two years. In a bid to rein inflation, RBI has hiked key policy rates by 13 times since March 2010. However, this time around, the RBI has kept policy rates on hold at its policy review last Friday, sending a strong signal that its next move is likely to be an easing of monetary policy as risks to growth increase.

The S&P CNX Nifty touched a high and low of 4,740.60 and 4,632.95, respectively.
The top gainers on the Nifty were DLF up 5.62%, PNB up 4.37%, Tata Motors up 4.10%, IDFC up 3.39% and JP Associates up 3.37%. On the flip side, Wipro down 3%, Sesa Goa down 2.04%, Bharti Airtel down 1.92%, Cairn down 1.55% and SAIL down 1.24% were the top losers on the index.
The European markets were trading on a positive note. France's CAC 40 surged 1.40%, Britain's FTSE 100 soared by 1.13% and Germany's DAX jumped by 1.11%.
Asian stock markets ended mostly lower on Thursday amid expectations that the European Central Bank's massive lending to euro-zone banks will not solve the region's debt crisis. The performance in Asia followed a flat finish for the Dow Jones Industrial Average on Wednesday, after an ECB bank-lending program garnered higher-than-expected demand. The ECB loaned 489 billion euro to 523 banks for three years.
Chinese key share market closed down 0.2 percent after hitting its lowest level since March 2009, as investors worried liquidity will tighten at the year-end following fundraising by large corporates. However, the index bounced back from a decline of as much as 1.9 percent, led by the energy sector, especially green energy-related shares due to the government's support for environmental protection. Moreover, Seoul shares inched down as market cheer from the ECB's release of cheap liquidity was met with doubt over how much would flow to euro zone countries.