Markets surged to end at record highs in the week to March 7 amid aggressive buying by foreign institutional investors (FIIs) in battered domestic sectors on the back of improving macroeconomic data, prospects of a Bharatiya Janata Party (BJP)-led government coming to power and stability in the rupee.
The 30-share Sensex surged 800 points, or 3.8 per cent, to end at 21,920. The 50-share Nifty rose 250 points, or four per cent, to end at 6,527.
Market volatility was also on the upswing, with India VIX, a measure of traders' perception of near-term market risks, rising 15.5 per cent to 16.7 on Friday, indicating traders were buying options as hedge against any possible correction.
However, the broader indices underperformed the benchmarks as focus shifted to large-caps and index-based stocks. The BSE Mid-cap index ended three per cent higher at 6,693 and the BSE Small-cap index closed 2.6 per cent higher at 6,612.
FIIs have remained net buyers in equities for 17 sessions. During this, they have bought equities of Rs 9,500 crore. On Thursday, they were net buyers of Rs 1,273 crore and on Friday of Rs 2,577 crore.
The BJP-led National Democratic Alliance is likely to win between 212 and 232 seats and the United Progressive Alliance 119-139 seats in the Lok Sabha elections, a poll survey said.
The CNN-IBN-Lokniti-CSDS national election tracker projected the BJP was likely to get between 193 and 213 seats and the Congress 94-110 seats.
The current account deficit (CAD) for the December quarter was $4.2 billion, or 0.9 per cent of the gross domestic product (GDP), a sharp fall from the $31.9 billion (6.5 per cent) a year ago. The fall resulted from a pick-up in exports and moderation in imports, specially of gold.
The European Central Bank and Bank of England kept their key policy rates unchanged. However, Russia's central bank raised its key policy rate by 150 basis points to seven per cent from 5.5 per cent, from March 3, after the rouble plunged against the dollar.
The rally during the week was led by rate-sensitive sectors except automobile that ended marginally higher. Foreign funds that had cut exposure to infrastructure and real estate sectors seem on a bargain hunt, with most available at attractive valuations.
The BSE Realty index was the top gainer among the sectoral indices to end 13 per cent higher, followed by Bankex, Capital Goods, Metal, Oil and Gas indices, which ended up eight-10 per cent higher each.
The improving macroeconomic data boosted sentiment for banks, proxy for the economy. ICICI Bank was the top gainer, up 15 per cent, followed by Axis Bank, State Bank of India and HDFC Bank, up 6.6-11 per cent each.
In the infrastructure segment, Larsen & Toubro ended eight per cent higher and Bharat Heavy Electricals 10 per cent higher. Metal shares saw value buying at lower levels, with Hindalco emerging as the top Sensex gainer, up 19 per cent, followed by Tata Steel and Sesa Sterlite. Reliance Industries Ltd, range-bound in the previous weeks, rose nine per cent to Rs 869 in the week.
The week ahead
The market will watch out for the advance-tax payments by companies due March 15, apart from the industrial production data for January and inflation data based on consumer price index on Wednesday, March 12. On Friday, the government will release wholesale price index data for February.
On the global front, the US' non-farm payrolls data released on Friday will be in focus.