Nifty closes above 5800 amid volatility; IT, FMCG on fire

16:25

Moneycontrol Bureau
Equity benchmarks surged Thursday, but brokers cautioned of volatility near term, given the global geopolitical developments and India's weak macro-economic fundamentals.

The Sensex ended at 19410.84, up 233.08 points over the previous close, and the Nifty gained 66.05 points to close at 5836.95.

To everybody's surprise, the market did not react negatively to the Cabinet decision to pass the Food Bill Ordinance. The cheap food programme covering 67 percent of the country's population is expected to further strain the already weak finances.

"This will pressure the fiscal deficit down the road, and that cannot be good for foreign investor sentiment, capital inflows and financing deficit," said Sajjid Z Chinoy, Economist (Asia), JP Morgan, in an interview to CNBC-TV18 earlier today.

FMCG and IT were the star performers of the day, while investors ignored shares from the power, metal and capital goods shares.

UCO Bank, TTK Prestige, Reliance Capital, Motherson Sumi and BPCL were the major gainers today, rising 5-10 percent.

Rupee continues to be the key worry for now, even as the RBI doing everything possible to support it, other than outright and aggressive intervention in the currency market.

"60/USD mark has become a strong support for the time being. With the flows having dried up substantially and outflows still continuing, we expect the rupee to be under pressure only," Ashutosh Raina of HDFC Bank.

The weak rupee is also likely to hurt the first quarter earnings of many companies, which be announcing their numbers shortly.

"We think there could be a risk of disappointment in earnings, especially
given the recent rupee depreciation," brokerage house Bank of America Merrill Lynch said in a note to clients, as it cautioned of the weakest sales growth in the last 15 quarters.

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