Markets log third weekly gains

The markets rallied smartly for the third straight week on the back of strong gains by large-cap stocks, while mid- and small-caps underperformed. The banking stocks which were in focus due the RBI policy turned out to be the major gainers this week. Energy stocks led by heavyweights ONGC and Reliance also ended with sharp gains.

After a robust start to the week, the Sensex ascended higher to fresh 32-month highs. The index touched a high of 19,639, and finally settled with a gain of 4.2% (795 points) at 19,595. In the process, the index has surged almost 9% (1,597 points) in the last three weeks.



The sectoral gains were significant, the mid-caps and small-caps largely underperformed. The BSE Mid-cap index was up marginally by 0.7% at 8104, and the small-cap index declined a bit to 10,239.

The RBI in its maiden mid-quarterly policy review hiked the repo rate by 25 basis points, and the reverse repo rate by 50 basis points, thereby narrowing the gap between the two to 100 basis points. The RBI move was seen by economists as a signal to end of tightening cycle. As a result of which the rate sensitives' rallied in the second half of the week.
 
Among other economic news, the food inflation rose over 15% under the new method adopted for calculation. The finance minister, Pranab Mukherjee, affirmed confidence in the India growth story, saying that 8.5% GDP growth for FY11 and 9% for FY12 are achievable.

On the corporate front, the advance tax numbers indicated a 13% rise in outgo for the top 100 companies. However, quarter-on-quarter comparisons show that the advance tax collections are lower with just 16% rise so far as against the government estimate of 23%.

Among sectors, The BSE Bankex soared nearly 6% to 13,745. The Oil & Gas index surged 5.5% to 10,736. The Consumer Durables index shot up over 4% to 6154. IT, Healthcare, Capital Goods and FMCG were the other prominent sectoral gainers.

Among the Sensex 30 stocks - DLF zoomed 9.5% to Rs 352, and HDFC soared 8.5% to Rs 684. Reliance, HDFC Bank, ICICI Bank, Maruti, Reliance Infrastructure, Sterlite and TCS rallied 5-7% each. BHEL, however, slipped over 1% to Rs 2,444.

IndusInd Bank with a gain of 11.5% at Rs 263 was the top gainer in the banking space. Axis Bank, HDFC Bank, Kotak Mahindra Bank and Punjab National Bank were the other major gainers.