ECB's QE propel Indian markets to new highs (Weekly Review)

The European Central Bank's (ECB) announcement of a mega bond-buying programme and expectations of further reforms by the government in the upcoming budget led to the barometer of Indian equities markets gaining more than four percent in the weekly trade ended Jan 23.

The buildup to the rally was led by the ECB announcement, and the past week's positive cues such as healthy industrial output numbers, slower inflation and the surprise rate cut by the apex bank.

All the positive cues led to both the main indices of the Indian equities market touching new record highs in the weekly trade.

The benchmark 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE) touched a new high of 29,408.73 points on Jan 23 surpassing its previous record of 29,060.41 points reached during Jan 22 trade.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) also touched a new high of 8,866.40 points on Jan 23 from its previous record of 8,774.15 points in Jan 22 intra-day trade.

The S&P BSE Sensex gained 1,156.95 points or 4.11 percent during the week ended Jan 23.

It closed the week ended Jan 23 at 29,278.84 points, while it had ended trade at 28,121.89 points on Jan 16.

"Sentiment was buoyed by the higher-than-expected stimulus measure by the ECB as well as the optimism created by RBI's rate cut last week. Marginally better-than-expected growth numbers in China helped several metal stocks," said Dipen Shah, head - private client group research, Kotak Securities.

"The remaining part of the quarterly results as well as budget expectations will drive markets and specific stocks over the next one month."

Market analysts expect that strong action of the fiscal reforms front will lead to further rate cuts from the RBI and help in overall improvement of growth rates and profitability.

According to Vinod Nair, head - fundamental research, Geojit BNP Paribas financial services, the Indian markets are well prepared to handle the next two major upcoming events including the Greek vote and US Fed meet.

"The QE (quantitative easing) package size has surprised the markets and EMs (emerging markets) are placed well to receive the same. Having said that, two more crucial events are awaited -- the Greek vote and Fed meet. Once these events are past us, India is better placed to factor budget expectations and reforms."

Major Sensex gainers on Jan 23 were: Tata Power, up 6.86 percent at Rs.88.80; Tata Motors, up 3.81 percent at Rs.587.90; Bharti Airtel, up 3.72 percent at Rs.383.70; Cipla, up 3.15 percent at Rs.674.75; and Larsen and Toubro (L&T), up 2.58 percent at Rs.1,706.05.

The losers were Gail, down 1.80 percent at Rs.423.10; BHEL, down 1.67 percent at Rs.278.95; ONGC, down 1.09 percent at Rs.348.55; DrReddy's Lab, down 0.49 percent at Rs.3,344.85; and Tata Consultancy Service (TCS), down 0.44 percent at Rs.2,501.70.

The Indian markets will remain closed Monday on account of Republic Day. On Tuesday, companies like Maruti, Union Bank, Titan, Idea, Godrej Properties and Eveready may announce quarterly earnings.