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A Feel-Good Week

India's thumping test victory over Pakistan coupled with excellent third quarter economic growth numbers saw the markets remain in positive territory for the second consecutive week.

Equity markets had a good run at the back of positive news of excellent third quarter economic growth numbers. The last week of the fiscal saw BSE Sensex gaining 4.69 per cent to 5,788 points while the Nifty climbed 5.36 per cent to 1,841 points. There was renewed buying interest in sectors like banking and PSU. But unlike last week, mid-caps outpaced large caps. The CNX Mid Cap 200 Index smartly spurt by 8.38 per cent and the broader S&P CNX 500 Index gained 5.96 per cent.

The only negative news came from the ONGC counter as there was over-allotment of shares to retail investors, which was later confirmed as an error on the part of the registrar to the issue. Consequently, the stock witnessed a see-saw ride.

The week started with a strong rally in banking stocks, led by mid-cap PSU banks. The spurt was attributed to expectations of better fourth quarter results and falling inflation, which diminish the chances of an interest rate hike. The continuous currency appreciation along with Australian backlash to restrict outsourcing to India (as if the US wasn't enough) saw the three-day uptrend in technology shares come to a halt on Tuesday. The Sensex lost 50.93 points that day. Wednesday saw the BSE Sensex surge by 1.27 per cent at the back of the good economic data released by the government that the GDP growth rate for the third quarter was estimated at 10.4 per cent better than all emerging economies including China, compared to 2.2 per cent during the corresponding period of the previous year. The bullish sentiment continued on Thursday, and India's victory over Pakistan improved the mood further. The BSE Sensex climbed 150 points on Thursday to close at 5,741 points. The last trading day saw a 35-point rise in the Sensex. The public issue of ICICI Bank, which opened on Friday received good response and was over-subscribed.

The combined average turnover jumped to Rs 6,773 crores -- up by almost 13 per cent over the previous week.

In sectoral indices, the BSE Bankex gained 6.24 per cent on account of heavy buying by FIIs. BSE FMCG and BSE PSU indices gained smartly by 4.7 per cent and 7.01 per cent respectively over previous week. Not surprisingly, BSE IT Index was down 3.19 per cent on account of currency fears.

On Thursday, FIIs recorded the highest single day net purchases to the tune of Rs 3,490 crore. Overall, the FIIs made net investment of Rs 6,123 crore during the week. On the other hand, mutual funds remained net sellers for the second straight week at Rs 74 crore.

In the US, NASDAQ recorded the highest weekly percentage gain of 4.96 per cent in the past one year on positive news of jobs growth. US employers added 3.08 lakh jobs this month, far more than the anticipated 1.2 lakh after months of disappointing growth. The Dow Jones also registered a gain of 2.52 per cent.

With strong economic indicators coupled with expectation of better results, the upbeat mood seems likely to continue in the coming week. Also, the possible arrival of the S&P team (after six months) to review India's rating in view of the positive attributes of the economy is ample testimony. And, of course, good FII inflows will keep the Indian equity market in good spirits.