Mumbai: The market ushered in the New Year with a bang as both the key indices, Sensex and Nifty, continued their bull run for the second week in a row and attained their highest levels in nearly two years on the back of US budget deal and positive growth in service and manufacturing sectors in the country.
The market resumed trading on a cautious note after investors decided to play safe as US lawmakers were trying to reach a pact to avoid the 'fiscal cliff' of over USD 600 billion in spending cuts and tax hikes.
The US Senate approved an agreement on Tuesday to help the world's biggest economy avert the fiscal cliff. The deal boosted the world stock markets, including the Indian bourses. The proposal would extend tax rates on annual household income under USD 4,50,000 and postpone automatic spending cuts for two months.
Barring FMCG index, which closed in the red, other sectoral indices gained between 0.96 percent and 5.19 percent during the week with realty, PSU, oil & gas and consumer durable leading the pack.
The Bombay Stock Exchange 30-share barometer showed a weak trend on the first day of the week, but then went on a gaining spree to settle up 339.24 points, or 1.74 percent, at 19,784.08, a level not seen since January 6, 2011.
Similarly, the wide-based S&P CNX Nifty of the NSE spurted by 107.80 points, or 1.82 percent, to settle above 6,000 level for the first time after two years at 6,016.15.
State-run oil companies gained on hopes that a proposed revision in the Government's pricing formula would boost gas prices. Additionally, Oil Minister M Veerappa Moily has allowed RIL and Cairn India to explore for oil and gas within the producing fields subject to certain conditions.
Besides, India's manufacturing sector growth improved further in December, registering the fastest pace in 6 months, driven by a strong pick up in new orders, an HSBC survey said.
With manufacturing PMI (Purchasing Managers Index) up and prices trending down, experts said data augurs well for the economy.
"PMI data suggest that the manufacturing sector, after stabilising between July and October, began to improve from November, and inflation pressures remain under check," said Sonal Varma, India economist, Nomura.
Finance Minister P Chidambaram on Wednesday said that the Government is considering steps to reduce gold import by making it more expensive. The yellow metal is a major constituent of India's rising current account deficit (CAD).
Traders said moves to stem gold demand are structurally positive for the economy's fiscal health.
The global markets began 2013 with gains as all major bourses in the world ended the week on a positive note. The positive sentiment was generated by the agreement reached by the US lawmakers to avert a financial crisis.
Second-line stocks outperformed the Sensex (which gained 1.74 percent). The BSE Small cap and Mid cap indices ended with weekly gains of 3.72 percent and 3.12 percent respectively.
"Market is on right course of recovery. Reforms, passing of few important bills, huge FII inflow have kept market ticking on upside. Expected rate cut is keeping the hope alive. However after a vertical run from 4500 to 6000 plus I do not think to the journey is smooth as large section of the media believes. I see Nifty at the most can test 6130 6150 in this settlement and not beyond that," Mr. Kishor Ostwal, CMD, CNI Research Ltd said.
"If Nifty falls below 6000 then we can see Nifty tailing back all the way to 5850 - 5820 which should be a shock for traders. Earning season is starting from 11th of Jan and there may be cases of some out performances. Since stock market fully factors in the results the stock prices corrects only on sharp disappointments and rise only on extra ordinary out performance," he added.
Overall, 26 out of 30 sensex-based scrips closed with sharp to moderate gains while others finished with losses. ONGC was the top gainer with a rise of 7.11 percent followed by BHEL 6.57 percent, GAIL India 5.40 percent, SBI 4.50 percent, ICICI Bank 3.50 percent, Dr Reddy's Lab 3.38 percent, Bajaj Auto 3.17 percent, Wipro 3.07 percent, Maruti Suzuki 2.92 percent, Jindal Steel 2.82 percent, Bharti Airtel 2.75 percent, Sterlite Ind 2.65 percent, TCS 2.54 percent, HUL 2.51 percent, Coal India 2.50 percent, RIL 2.43 percent, Hindalco 2.43 percent, Tata Motors 1.82 percent, M&M 1.69 percent and Tata Steel 1.18 percent.
Among sectoral indices, the BSE-Realty spurted by 5.19 percent, BSE-PSU by 4.20 percent, BSE-Oil&Gas by 4.06 percent, BSE-CD by 3.48 percent, BSE-Power by 2.57 percent and Bankex by 2.54 percent.
The total turnover on the BSE and the NSE was up at Rs 11,432.15 crore and Rs 52.712.07 crore from last weekend's turnover of Rs 8,780.72 crore and Rs 40,379.64 crore.
Foreign Institutional Investors (FIIs) continued their buying spree and they pumped in Rs 5,685.01 crore during the week, including provisional data of January 4.