Post Session -Sensex extends rally on firm Asian cues Analysis for Feb 02, 2012

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Driven by firm Asian market cues, the key domestic benchmarks notched up handsome gains for the third straight session. The Teck and the IT space led the rally.

BSE SENSEX closed at 17431.85 up by 131.27 points or by 0.76 % and then NSE Nifty ended at 5269.9 up by 34.2 points or by 0.65 %.The BSE MIDCAP closed at 5969.76 up by 32.57 points or by 0.55 %, while the BSE SMLCAP ended at 6608.97 up by 35.39 points or by 0.54 %.The BSE Sensex touched intraday high of 17504.25 and intraday low of 17308.28 The NSE Nifty touched intraday high of 5289.95 and intraday low of 5225.75.

The strong closing of the US markets on Wednesday boosted domestic sentiment during morning trade. On Wednesday, the Dow Jones Industrial Average ended up 0.66%, the Nasdaq closed up 1.22% and the S&P 500 ended up 0.89%. Soon after witnessing a gap up opening, the benchmarks continued to trade on a firm note amid robust cues from the Asian markets. Asian markets were trading higher on Thursday amid optimism that the global economic recovery is picking up. Robust manufacturing data from the US and China in January 2012 boosted sentiment. While manufacturing activity in the US expanded at the fastest pace in seven months in January 2012, in China the pace of manufacturing activity quickened last month. Moreover, manufacturing downturn eased in the Eurozone in January 2012 as manufacturing activity in the 17-member Eurozone economy contracted at a slower pace in January 2012, a sign of stabilization of economic activity in the region. On the domestic front, manufacturing activity rose at the fastest pace in 8 months last month, a sign that economic growth is picking up. However, the domestic benchmarks trimmed gains and fell to the day's low after the news that the Supreme Court cancelled all the 122 licenses issued to telecom firms on or post January 2008. However, the benchmarks recovered from the day's low and continued their upward march during afternoon trade. The benchmarks traded on a firm note in the last couple of hours of the session amid favourable global cues. Finally, the benchmarks closed on a strong note, with the Sensex and Nifty gaining over 0.60% each. Among the BSE Sectoral indices, BSE Teck and BSE IT ended up 2.08% and 1.53% respectively.

Among the 30 Sensex stocks, Bharti Airtel, DLF, Sterlite Industries, Wipro Limited and GAIL India gained 6.88%, 4.05%, 3.90%, 3.46% and 3.15% respectively. Among the Sensex stocks, there were 21 advances and 9 declines. On BSE out of total shares traded 3044, shares advanced were 1593 while 1328 shares declined and 123 were unchanged.

On the Economic front, India may make 45 per cent of its payment in rupees to Iran for Iranian oil imports, according to reports. India is the second largest oil customer for Iran.

On the Global front, manufacturing activity in the world's largest economy, the US, expanded at the fastest rate in seven months in January 2012 as new orders jumped, a sign that the US economic recovery is gathering momentum, said the Institute of Supply Management (ISM) on Wednesday. The ISM Purchasing Managers' Index (PMI) rose to 54.1 in January 2012 from 53.1 in December 2011, signaling a faster rate of expansion in manufacturing activity in January 2012, compared to the previous month.

On the Asian front, Shanghai Composite ended up 1.96%, Hang Seng closed up 2% and Nikkei 225 ended higher by 0.76% on Thursday.

On the European front, CAC 40 was down 0.07%, DAX was up 0.10% and FTSE 100 was trading lower by 0.19% on Thursday.

On the Corporate front, Coal India is proposing to pay a dividend of Rs 5,684 crore to the government in 2011-12. The stock ended up 1.47% at Rs 321.80 on the BSE.

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