Mumbai: The market posted biggest ever monthly gains since September 2010, rising 11.5 per cent led by highest monthly inflow of foreign money since November 2010. The Nifty closed tad below the 5200 mark while the Sensex rallied over 17000 level quite smartly.
Sharp appreciation in rupee, value buying by institutional investors in most beaten down sectors in last year, RBI's hint to cut rates soon after 50 basis points cut in CRR on January 24, some progress in the eurozone, improvement in the US economic data and Federal reserve's decision to keep interest rates at 0-0.25 per cent till the 2014 helped the market to show stunning performance in January as compared to global peers.
The market managed to recover majority of Monday's losses on Tuesday. The Sensex rose 330.25 points or 1.96 per cent, to close at 17,193.55 and the Nifty moved up 111.95 points or 2.20 per cent, to end at 5,199.25.
Foreign institutional investors have bought more than Rs 10,500 crore worth of Indian equity shares in January - highest ever since the November 2010.
Capital goods, banks, metals and oil & gas led the rally in January as they heavily beaten down in 2011. However, technology sector underperformed due to weak eurozone.
Varun Goel, Head - PMS at Karvy Private Wealth said he would continue to hold his view of 20-25 per cent of gains for the calendar year.
According to him, the key trigger for markets now is what RBI decides from here on. He says, if the RBI starts cutting repo from March itself then we would see rally to continue.
He says now the leadership should shift from largecap to midcap space. "Last year a lot of the mid caps got beaten down 60-70-80 per cent - especially some of the sectors like PSU banking space and infrastructure. As and when we see a reversal of the interest rate cycle we would see some of these stocks bounce back very sharply," he adds.
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