Money on the markets

Sensex gains on signs of easing recession

Kshitij Anand

Jun 5, 2009 11:18 UTC

The BSE Sensex rose on Friday on positive global cues amid profit taking by cautious investors, posting its 13th consecutive weekly gain in four years.

The 30-share sensitive index swung from an intra-day high of 15,257 to an intra-day low of 14,994, and finally closed 94 points higher at 15,103. The fifty-share Nifty ended 0.3 percent higher at 4586.

The rise in the benchmark index was led by L&T, Infosys, BHEL and ICICI Bank.

On the sectoral front, the BSE Capital Goods Index gained 2.9 percent, followed by the IT Index which ended 2.6 percent higher. The BSE FMCG Index, however, ended lower at 2.3 percent.

A global rally in stocks has propelled the benchmark up 88 percent from a 2009 low in early March, with foreign funds pouring in more than $6 billion into the market.

Inflation down but reforms needed to boost demand

The latest inflation data for early March may please authorities ahead of national elections. Political leaders will trumpet the fact that the government’s efforts have yielded results and the demon of inflation has finally been tamed.

But the early March number throws up some serious concerns. It signifies that the Indian economy has entered a phase of deflation for a temporary period. Demand in the economy is extremely subdued and fresh efforts are needed to restore confidence.

Sensex snaps two-day rise

The benchmark index shrugged off lower-than-expected inflation figures and fell 1.21 percent on Thursday, as a slump in domestic demand and fresh concerns over the U.S. economy took a toll on investor sentiment.

The Sensex closed 110.97 points down at 9,090.88, snapping a two-day rise. Losses were led by Reliance Industries, which fell 1.6 percent to 1286.75, and HDFC which dropped 3.6 percent.