Wkly review: New Year begins with a 7% pullback rally

Depressed investors found relief in the opening week of the New Year 2009 as the stock markets staged a pull-back rally and the government and the financial regulator Reserve Bank announced a fresh set of fiscal and monetary measures aimed at boosting growth.

The upbeat mood in bourses is expected to gather steam on Monday on the back of government's second stimulus package, announced after trading hours on Friday and the RBI slashing repo and reverse repo rates to all-time lows and also reducing the Cash Reserve Ratio (CRR) by 50 basis points, the lowest since February 2006.

The markets remained on a firm ground during the week as tensions between India and Pakistan showed signs of cooling down with easing inflationary pressure giving a boost to the market sentiment.

However, the Bombay Stock Exchange bellwether index continued to get resistance at the 10-K mark as investors took benefits on any surge to this psychologically important level.

In the week to January 3, the BSE barometer concluded the week at 9,958.22, netting a rise of 629.30 points or 6.75 per cent over its previous weekend's close.

Similarly, the National Stock Exchange's (NSE) 50-share Nifty gained 189.50 points or 6.63 per cent to finish the week at 3,046.75 from its last weekend's close.

The biggest gainer of the week was the interest sensitive Realty sector which is expected to get relief from sops provided in the second stimulus package.

Inflation fell to a 10-month low of 6.38 per cent for the week ended December 20.

India's fourth largest software exporter Satyam Computer Services gained 31 per cent on expectations of change in the company's management after a recent controversy over corporate governance practices following an abortive attempt of acquisition of two infrastructure companies.

Analysts, however, said that the anticipated rally next week may not last long if corporate earnings fell short of market expectations. The third quarter results are scheduled to start pouring in after January 12.

The recovery was so strong that all sectoral indices ended in the green with an average gain of 1.4 per cent to 12.0 per cent. Realty, metal and capital goods segments led a smart recovery.

The BSE-Realty index spurted by 271.59 points or 12.34 per cent, the BSE-Metal by 611.02 points or 12.34 per cent and the BSE-CG by 686.56 points or 10.40 per cent.

Small-cap and mid-cap counters also attracted good buying support from retail investors and they outperformed the Sensex as the BSE Small-Cap index flared up by 321.91 points or 9.07 per cent to end the week at 3,870.45 and the BSE Mid-cap by 284.50 points or 9.16 per cent to 3,391.18.

The broad-based BSE-100 Index also recovered sharply by 337.09 points or 7.00 per cent to end the week at 5,154.78 from its last weekend's close of 4,817.69.

The BSE 200 Index and the Dollex-200 too were quoted higher at 1,197.04 and 407.34 at the weekend compared to previous weekend's close of 1,115.86 and 383.12 respectively.

On the NSE, the S&P CNX Defty rose by 117.55 points or 5.76 per cent to end the week at 2,157.80 from 2,040.25.

The CNX Nifty Junior also shot up by 444.50 points or 10.28 per cent to 4,769.75 from preceding weekend's close of 4,325.25.