Stocks rallied on Friday on hopes of a rate cut by the RBI on Monday and the markets getting a sense of Pranab Mukherjee's nomination for the post of president of India. Strength in European shares, driven by expectations that major central banks would provide more monetary stimulus to insulate markets in case Greece exits the eurozone, contributed to gains.
But, the undertone is cautious ahead of the Greek elections - the deciding factor for the country's future in the eurozone - as investors are uncertain about the severity of the market's reaction if the party in favour of anti-austerity measures wins.
"For me, caution is key in such markets. There has been a lot of negative news and any hint of trouble in, say, the euro area could take us down," said Nirmal Jain, chairman of brokerage IIFL.
Euro Stoxx 50 was up 1.2% at the time of going to print on Friday. Most Asian markets ended firm, with the MSCI Asia Apex 50 rising 1.3%.
The Sensex rose 271.95 points, or 1.63%, to 16,949.83. The Nifty rose 84.30 points, or 1.67%, to 5,139.05. Both the indices, which started on a firm note, gathered steam mid-way through the session as investors cheered the prospect of a new finance minister if Mukherjee was elected as president. Dalal Street is rooting for a market-friendly FM, who will push through economic reforms.
"The rise in markets was on account of rumours that Montek Singh Ahluwalia will become the FM and hopes of rate cuts," said Jain.
The extent of optimism in frontline shares, which constitute the key indices, did not rub off entirely on the broader market, with gainers beating losers 1,525:1,165 on BSE.
"There was some uncertainty over the presidential race. With Pranab Mukherjee being named as the UPA presidential candidate, we'll have to see who becomes the new finance minister. We should get a clearer picture on this towards mid-week," said Rashesh Shah, chairman and CEO, Edelweiss Group.
Foreign institutions net bought shares worth Rs 339 crore on Friday, according to provisional NSE data. In addition to the Greek election results late Sunday, a lot hinges on the outcome of the Reserve Bank of India's rate-setting meeting. The market expects the central bank to lower repo rate and cash reserve ratio for banks, but bets are on the extent of the monetary policy easing.
"I expect a 25-basis-point rate cut; the RBI may also opt for a CRR cut to infuse more liquidity. So that will be positive news," said Shah. "Am slightly optimistic now... The party supporting anti-austerity drive may win in Greece, but that is not likely to upset the market. The impact of Greece elections will only be known after three months."
News bureau,
But, the undertone is cautious ahead of the Greek elections - the deciding factor for the country's future in the eurozone - as investors are uncertain about the severity of the market's reaction if the party in favour of anti-austerity measures wins.
"For me, caution is key in such markets. There has been a lot of negative news and any hint of trouble in, say, the euro area could take us down," said Nirmal Jain, chairman of brokerage IIFL.
Euro Stoxx 50 was up 1.2% at the time of going to print on Friday. Most Asian markets ended firm, with the MSCI Asia Apex 50 rising 1.3%.
The Sensex rose 271.95 points, or 1.63%, to 16,949.83. The Nifty rose 84.30 points, or 1.67%, to 5,139.05. Both the indices, which started on a firm note, gathered steam mid-way through the session as investors cheered the prospect of a new finance minister if Mukherjee was elected as president. Dalal Street is rooting for a market-friendly FM, who will push through economic reforms.
"The rise in markets was on account of rumours that Montek Singh Ahluwalia will become the FM and hopes of rate cuts," said Jain.
The extent of optimism in frontline shares, which constitute the key indices, did not rub off entirely on the broader market, with gainers beating losers 1,525:1,165 on BSE.
"There was some uncertainty over the presidential race. With Pranab Mukherjee being named as the UPA presidential candidate, we'll have to see who becomes the new finance minister. We should get a clearer picture on this towards mid-week," said Rashesh Shah, chairman and CEO, Edelweiss Group.
Foreign institutions net bought shares worth Rs 339 crore on Friday, according to provisional NSE data. In addition to the Greek election results late Sunday, a lot hinges on the outcome of the Reserve Bank of India's rate-setting meeting. The market expects the central bank to lower repo rate and cash reserve ratio for banks, but bets are on the extent of the monetary policy easing.
"I expect a 25-basis-point rate cut; the RBI may also opt for a CRR cut to infuse more liquidity. So that will be positive news," said Shah. "Am slightly optimistic now... The party supporting anti-austerity drive may win in Greece, but that is not likely to upset the market. The impact of Greece elections will only be known after three months."
News bureau,
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