Reports of a new 'Quantitative Easing' plan by US Fed and hopes India will take more bold steps on economic reforms after hiking diesel price boosted the market sentiment.
The sentiment remained positive throughout the week, despite inflation rising by a higher-than-expected 7.55 per cent in August, which may restrain RBI from cutting interest rates at its monetary policy review next week, said dealers.
The 30-share BSE benchmark resumed higher at 17,780.93 and touched 18,000 level after six months to 18,498.54 before concluding the week at 14-month closing high at 18,464.27, showing a net gain of 714.62 points, or 4.03 per cent. The Sensex had closed at 18,518.22 on July 26, 2011.
The 50-share NSE index Nifty also shot up by 218.95 points, or 4.09 per cent, to close at nearly seven-month high of 5,577.65.
"Sensex rallied 2.5 per cent on Friday in response to Government's first major move to curb fiscal deficit by raising diesel price and announcement of economic stimulus by the US Federal Reserve. Aviation, retail and cable TV services shares rallied on hopes of green signal to hike in FDI cap," said Sanjeev Zarbade, VP-Private Client Group Research, Kotak Securities.
"After three years of policy paralysis, the government has broken the jinx. Market had been pessimistic for long as only bad news were coming out like CWC, 2G, coal, mining scams etc which made some FII to always go short on Indian shores hoping nothing positive can come," Kishor Ostwal, CMD, CNI Research Ltd, said.
"But Government acted in a vibrant fashion for the last two days. It raised diesel price by over Rs 5 per litre and also announced FDI in multi-brand retail, FDI in power exchanges and FDI in civil aviation. This is a strong and big trigger for the equity markets," he said.
"Investors need to note that retail FDI was already announced by Cabinet but got stuck in Rajya Sabha. Now it is left to states and states may not respond kindly even those ruled by Congress.
"Hence, it (multi-brand retail) is still far from reality. As far as other FDI in civil aviation is concerned it is nothing but addition to 200-odd pending Bills in Parliament," he added.
"QE 3 from US Fed also added to the bullish sentiment. Market will cross 5,600 levels on Monday and probably even cross 5,630 once but may see some profit booking later in the week for rolls which is due on September 27. Even on Friday, when market rose by 450 points, midcaps did not participate (in rally)," Ostwal further commented.
Domestic market received a boost as Asian and European shares jumped after Germany's top constitutional court allowed the country to ratify the euro-area bailout fund with certain conditions.
Increased buying by Foreign Institutional Investors (FIIs) also the factor behind smart rise in the share values. They pumped in nearly Rs 5,104.62 crs during the week, including provisional figure of Rs 2,833.72 on Friday.
Metal shares gained as prices of industrial metal rallied after the US Federal Reserve launched aggressive stimulus that could boost demand for the metals.
Major gainers from the sensex pack were Hindalco Ind (10.53 per cent), Tata Motors (10.01 per cent), Larsen (8.38 per cent), Tata Steel (8.01 per cent), Icici bank (6.95 per cent), Coal India (6.11 per cent), Reliance Ind (5.72 per cent), Jindal Steel (5.69 per cent), Infosys (5.48 per cent), HDFC (5.27 per cent), Maruti Suzuki (4.26 per cent), SBI (3.96 per cent), Hero Motoco (3.12) and Gail India (2.96 per cent).
Among the sectoral indices the BSE-Metal rose by (5.42 per cent) followed by BSE-CG (5.26 per cent), BSE-Realty (5.22 per cent), BSE-Bankex (4.66 per cent), BSE-Auto (4.25 per cent), BSE-Oil&Gas (4.07 per cent), BSE-Power (3.85 per cent), BSE-IT (3.69 per cent) BSE-Teck (3.15 per cent), BSE-CD (2.78 per cent) and BSE-PSU (2.08 per cent).
The dollex-30 and the dollex-100 also rose by 5.83 per cent and 5.33 per cent, respectively.
The BSE-100 and the BSE-200 shot up by 3.54 per cent and 3.29 per cent on the back of heavy buying from retail investors.
Total turnover at BSE and NSE rose to Rs 10,663.21 crore and Rs 49,445.49 crore, respectively from the last weekend's level of Rs 9,146.43 crore and Rs 43,692.26 crore.
Forex: In tandem with sharp rise in local stocks amid heavy dollar selling by exporters and some banks, the Indian rupee also rallied by 106 paise to settle the week at about 2-1/2-month high of 54.30 against the Greenback.
Weak dollar overseas amid sustained capital inflows also helped the rupee to rise for the second consecutive week.
At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed slightly better at 55.26 a dollar from last weekend's close of 55.36 and moved in a wide range of 54.29 and 55.54 before concluding the week at 54.30, showing a rise of 1.91 per cent.
The BSE benchmark Sensex flared up by nearly 715 points or 4.03 per cent to end the week at 14-month high, mainly supporting the rupee rise.
A sharp fall in dollar overseas, triggered by US Federal Reserve's announcement on Thursday of a fresh round of quantitative easing aided rupee to end in green.
Provisional data from stock exchanges showed FIIs pumped in Rs 2,833 crore in stocks on Friday amid reports that India will take more bold steps on economic reforms after hiking diesel price by Rs 5.63 per litre, which boosted the rupee sentiment on last day of the week.
Mr. Pramit Brahmbhatt, CEO, Alpari Financial Services (India) Pvt. Ltd. said, "The rupee started the week on a firm note and continued to gain strengths with mild rebound in between but ended the week around the weeks high.
"The onus in the market was majorly placed on to the international events such as the German Constitutional Ruling and the FOMC meet. The domestic negative events were overshadowed by the positive global events and policy action taken up by the government".
"The government raised the fuel prices and set a cap on the subsidised LPG supplies and also allowed FDI in multi brand retail and other sectors such as power, aviation, etc, on the last day of the week.
"It lived up to its commitment by making the FDI in reality by the second week of September as assured earlier. The dollar index continued to decline for the fourth straight week," Brahmbhatt added.
The RBI fixed the reference rate for US dollar and euro at Rs 54.7270 and Rs 71.3415 from Rs 55.5230 and 70.2025 last weekend, respectively.
The rupee premium for the forward dollar dropped further on sustained receivings by exporters.
The benchmark six-month forward dollar payable in February closed sharply lower at 157-159 paise from last weekend's level of 176-178 paise and far-forward contract maturing in August also remained weak to 307-309 paise from 332-334 paise last weekend.
The rupee recovered against Pound Sterling to end the week at 88.11 from previous weekend's close of 88.21 and also firmed up further against the Japanese yen to 69.63 per 100 yen from 70.12 previously.
However, it dropped further against the euro to 71.15 from last weekend's level of 70.37.
Oil and oilseeds: Groundnutoil, refined palmolein, linseed oil and castorseeds futures dipped further, while castorseeds bold and castorseeds commercial rebounded at the oils and oilseeds market during the week under review.
Groundnut oil prices dropped sharply following heavy stockists offloading amidst subdued retail demand on the back of ample supply positions.
Refined palmolein also declined in the absence of retail buying support as well as lower Malaysian cues.
Castorseeds bold and castoroil commercial prices recovered smartly owing to renewed demand from shippers and soap manufacturers.
Castorseeds futures both September and December contract fell on heavy speculative selling following lower export inquiries.
Linseedoil prices moved down further due to reduced demand from paint and allied industries.
In the edible oils segment, groundnut oil resumed lower at Rs 1,200 and slid further to finish at Rs 1,160 from preceding weekend's level of Rs 1,230. Showing a loss of Rs 70 per 10 kg.
Refined palmolein resumed slightly lower at Rs 600 and drifted to Rs 596 before settling at Rs 598 from last weekend's level of Rs 602, registering a loss of Rs 4 per 10 kg.
In the non-edible section, castorseeds bold resumed lower at Rs 3,650 and declined to Rs 3,625 before regaining to close at Rs 3,750 from last weekend's level of Rs 3,700, a rise of Rs 50 per 100 kg.
Castoroil commercial also opened lower at Rs 760 and eased to Rs 755 before recovering to end at Rs 780 from its previous weekend's level of Rs 770, a gain of Rs 10 per 10 kg.
Linseed oil resumed steady at Rs 830, later drifted to finish at Rs 825 per 10 kg from preceding weekend level of Rs 830, a marginal loss Rs 5 per 10 kg.
Moving to the futures section, castorseeds for September delivery resumed slightly lower at Rs 3,750 and drifted to close at Rs 3,695 from last Saturday's closing level of Rs 3,765 showing a loss of Rs 70 per tonne.
December contract also opened lower at Rs 4,111 and fell to Rs 3,890 before ending at Rs 3,992, showing a fall Rs 158 per tonne.
Bullion: Gold and silver maintained its positive momentum and gained modestly at the domestic bullion market here during the week under review.
Riding piggyback on strong global sentiment, the precious metal extended its buoyant march and surpassed the psychologically important milestone of Rs 32,000 per 10 grams before witnessing heavy profit-taking towards the fag-end, though it showed marginal gains on weekly basis.
Silver went on its speculative surge tracking the yellow-metal and encountered aggressive selling reducing its early gains.
In overseas, gold rode on much awaited the US Federal Reserves' quantitative easing programme which was finally unveiled on Thursday triggering a sharp rally.
Moving in line with gold, silver also catapulted to climb the important USD 34-level on strong investors demand.
In New York, gold for the December delivery zoomed to USD1,772.70 an ounce from last weekend's level of USD1,740.50 an ounce.
The December contract for silver also spiked to settle at USD 34.66 an ounce, as against USD 33.60.
Standard gold (99.5 purity) commenced higher at Rs 32,040 per 10 grams and fluctuated between Rs 32,390 and Rs 31,970 before closing at Rs 31,985 from preceding weekend's level of Rs 31,955, gain of Rs 30 per 10 gm.
Pure gold (99.9 purity) resumed firm at Rs 32,180 and hovered between Rs 32,540 and Rs 32,085 before concluding at Rs 32,130 over its previous close of Rs 32,095, registering a modest rise of Rs 35 per 10 gm.
Silver ready (.999 fineness) started strong at Rs 63,200 per kg and swung between Rs 64,470 and Rs 62,335 before ending at Rs 63,010 from the last Saturday's closing level of Rs 62,930, disclosing a gain of Rs 80 per kg.