Markets dazzle in Diwali week

The markets were on a record-breaking spree this week. The bourses re-wrote history to end above all-time closing highs, thereby surpassing the levels last seen in January, 2008. The Sensex ended above the 21k mark for the first time in its glorious history at 21,005, higher by 973 points or 4.9%, and the Nifty ended at 6312, up 295 points. And we are a mere percent away from the all-time intra-day highs.

The markets began the week on a healty note and took the rate hike by RBI in its stride. The central bank had raised the interest rates for the sixth time this year to battle inflation that remains well above its comfort zone of 5-6%. The central bank hiked the repo rate by 25bps to 6.25% and the reverse repo rate by 25bps to 5.25%, but left the cash reserve ratio unchanged at 6%. Further, it also signaled a pause to rate hike in its December review.

And the Federal Reserve's decision to inject fresh stimulus into the struggling US economy and the scintillating debut by Coal India was the perfect nudge for the benchmark indices to venture into hitherto unchartered territory on either side of Samvat 2066 and Samvat 2007. The Fed bought an additional $600 billion of treasuries through June and Coal India had a cracker of a listing to end Day 1 at Rs 342, a 40% premium over its issue price of Rs 245 per share to emerge as the fourth largest company with a market capitalization of Rs 216,240 crore ($ 47.33 billion).

The performance of the largest IPO in India's stock market history augurs well for the primary market in general and the divestment programme in particular. Whether the Coal India debut would mark an inflexion point for the return of the hitherto elusive retail investor is to be seen, but it is definitely a reason of cheer for the government, which has lined up a slew of primary issues for the next six months, begining with the FPO of PowerGrid due next week.

Meanwhile, food inflation, as measured by the wholesale price index (WPI), fell to a one-year low of 12.85% for the week ended October 23 as the prices of all major food items declined on the back of increased supplies. Food inflation was at 13.75% in the previous week ended October 16 and 12.87% during the corresponding period in 2009.

Jaiprakash Associates spurted by 11.3% at Rs 133 to emerge as the leading weekly gainer on the BSE. SBI jumped 10.7% at Rs 3489 and ACC gained 10.7% at Rs 1089. Hindalco, ICICI Bank and M&M were the other significant gainers for the week. And index heavyweight overcame its multi-month lethargy to end above the 1100 mark at Rs 1106.

The laggards during the week were Maruti (weakened by 2.4% at Rs 1513), Hero Honda (shed 0.6% at Rs 1854) and Tata Power (lost 0.3% at Rs 1390).