Weekly markets: Sensex soars 6% on global cues

Markets surged this week on global cues as European leaders decided on a plan to solve th Euro debt crisis. Analyst's expectation that the Reserve Bank would not hike rates further also strengthened sentiments - taking the Sensex 6% higher in the week.

The week started with the Sensex gaining on global cues with heavyweight Reliance contributing the most. Tuesday, markets ended with strong gains after a volatile session owing to the futures and options expiry and the RBI monetary policy review. The Sensex extended gains on Mahurat trading day after a lacklustre session of trade. Since the Indian bourses were closed on Thursday n account of Diwali, markets caught up with overseas rally on Friday - surging nearly 3% in the day. The Sensex finally ended up 1,019 points or 6% at 17,804 during the week. Nifty soared 311 points to 5,361.

The Reserve Bank of India raised the repo rate by another 25 bps on Tuesday in a bid to tackle inflation which has remained at elevated levels. However, it stated that “the likelihood of a rate action in the December mid-quarter review is relatively low.” This is the 13th hike since March 2010, which has seen the policy interest rate rise by a cumulative 525 basis points. It retained the March-end inflation projection of 7%.

Inflation for the week soared to a six-month high at 11.4% (year on year), due to a rise in vegetable prices.

Overseas, markets cheered a new plan by European leaders to solve the debt crisis on Thursday. They are now under pressure to finalise the details of their plan to slash Greece's debt burden and strengthen their rescue fund.

Metal shares zoomed after U.S. economic growth accelerated and euro zone leaders unveiled a plan to prevent the two-year-old debt crisis from spreading.  The improved Chinese manufacturing data, which is the world's largest consumer of aluminum and copper, also fuelled rally in the metal shares. BSE metal index soared 9.3% to 12,143.

Hindalco soared 17% to Rs 122. Sterlite soared 15% to Rs 115. Sterlite reported 1.01% fall consolidated in net profit to Rs 997.78 crore on 67.57% rise total income to Rs 10195.70 crore in Q2 September 2011 over Q2 September 2010. Steel stocks were up with Tata Steel and Jindal Steel gaining 9-11% each.

Realty and auto shares also moved up considerably - up over 8% each. Banking shares underperformed after the RBI deregulated the savings rate. BSE bankex ended up 2.5% at 11,372.

The central bank deregulated the bank deposit (savings) rates with immediate effect, subject to certain conditions. This is likely to push up cost of funds, effecting bank stocks negatively. The RBI has stipulated that each bank will have to offer an uniform rate of interest on savings bank deposits up to Rs one lakh. Above that, it may provide differential rates of interest.

Yes Bank surged 13.5% at Rs 315. Kotak Mahindra Bank after announcing its quarterly numbers went up 9.4% to Rs 509. Heavyweight, ICICI Bank added 7% to Rs 933. Meanwhile, HDFC Bank and SBI were weak and lost 1-2% each during the week.

From the auto pack, Tata Motors surged 16%. The company reported 24% rise in global sales to 1,07,258 units in Q2 September 2011 over Q2 September 2010. Maruti Suzuki's long labour unrest at its Manesar plant finally came to an end on Friday morning. The stock added 3.2% to Rs 1,128.

Power major National Thermal Power Corporation (NTPC) today announced a 15% increase in its net profit at Rs 2,424 crore for the quarter ended September 2011 as against Rs 2,107 crore a year ago. The stock was up 5.5% at Rs 179. ONGC jumped 7.2% to Rs 285 on reports that the company will get a windfall of over 1,300 crore from the domestically produced natural gas with the rupee touching a 30-month low against the U-S dollar.

ITC reported a 21.4% jump in net profit to Rs 1,514 crore for the quarter ended September 2011. It was Rs 1,247 crore in the same period a year ago. Total income rose 18.2% to Rs 6,266 crore from Rs 5,300 crore in the year-ago period. The stock ended up 5.6% at Rs 215.

Coal India managd to advance 2.8% to Rs 338. The company has reportedly violated the provisions of the New Coal Distribution Policy (NCDP). Larsen & Toubro recovered and added 5.8% at Rs 1,413. L&T had shed last week after cutting down its order flow forecast to 5% from 15% for FY12.

Broader markets underperformed with the BSE mid and small-cap indices gaining 2.6% and 2%, respectively. The consumer durables index was the sole loser among sectoral indices and slipped 1% this week to 6,633.