Markets yo-yo: Sensex hits 22000 for the first time, Nifty holds 6500

It was a muted opening for Indian shares this morning as the Sensex and the Nifty were marginally in red in early trade. However, the volatile Sensexhas hit yet another life high today at 22,005.54 while the NSE Niftywas holding on to most of its gains at 6514.55.

Expectations that the opposition BJP, led by its prime ministerial candidate Narendra Modi, would win those elections are helping spark some of the gains, amid widespread perceptions it has a more business-friendly stance than the ruling Congress-led coalition.

Though markets marked a new high, trade was extremely choppy with the blue-chip indices moving up and down.

The Indian rupee too opened weaker at 61.25 against Friday’s close of 61.08 against the US dollar.

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“Following a sharp rally, warnings about an imminent correction citing overbought levels are getting louder. Given that a stable government is expected at the Centre, any major correction in the coming weeks could be bought into,” said brokerage IIFL in a research report.

The current rally has been fuelled by a surge in buying by overseas investors. Foreign Institutional Investors (FIIs) posted their biggest daily purchases since December 9 on Friday, buying Rs. 2,577 crore worth of shares in the cash market.

[caption id=“attachment_73882” align=“alignleft” width=“435”]  Reuters[/caption]

Japanese shares slipped from a five-week high this morning as disappointing Chinese trade data and uncertainty over the crisis in Ukraine prompted investors to lock in recent gains.

“Investors are taking profits. There’s no clear direction in the market given concerns over Ukraine and the prospect of a rise in U.S. interest rates,” Yasuo Sakuma, a portfolio manager at Bayview Asset Management was quoted as saying by Reuters. “There is no strong catalyst for buying.”

The US markets staged a mixed Friday finish, with the S&P 500 ending at another record, as investors tracked the standoff in Ukraine and after February’s jobs report indicated the harsh winter could be the culprit behind recent weakness in economic data.Data from the Labour Department shows that the US economy is bouncing back from a weather-induced slowdown. US added 1,75,000 jobs in February. That was a significant climb from 1,29,000 jobs in January. The unemployment rate rose marginally to 6.7 percent during the month versus 6.6 percent in January.

IIP and inflation numbers this week would be in focus locally. Globally, the Ukraine situation isn’t helping the market as leaders vowed not to cede any part of their nation’s territory, even as Russia defended its virtual takeover of the disputed Crimean peninsula .

Meanwhile, theReserve Bank of India has said that the bank capital issue is a process and there is a need to find investors. The central bank will explore various processes for bank licence issue.

The BSE 30-share benchmark Sensex hit a lifetime intra-day high of 21,960.89 on Friday before settling at 21,919.79. Over the week, the Sensex has seen a spurt of nearly 800 points or 3.79 percent.

FIIs bought shares worth Rs 5,044.54 crore in the week,including provisional data of March 7.

Industrial production data for January will come out on Wednesday. The consumer price index (CPI) for February will be announced on Wednesday, while data for inflation based on the wholesale price index (WPI) is due on Friday.

These macroeconomic data releases are key ahead of the Reserve Bank of India’s monetary policy review on April 1.

“Going ahead, sustained FII flows, stable currency, improving macroeconomic data, probability of a stable government post elections could take markets higher. At the same time, adverse geopolitical developments could potentially prick this rally,” said Sanjeev Zarbade, Vice President- Private Client Group Research, Kotak Securities.

Corporate advance tax data is also expected to provide cues to the next batch of earnings, traders said. Market participants said the next major trigger for the stock market is the outcome of the upcoming general elections that will be held between April 7 and May 12.

Stocks in news

Shares in Ranbaxy Laboratories fell as much as 3.8 percent on Monday after the drug maker recalled more than 64,000 bottles of the generic version of a cholesterol-lowering drug in the United States after doseage mix-up was detected.

Ranbaxy confirmed the recall of select batches of the drug, a generic version of Pfizer Inc’sLipitor, but said the company had not received any product complaints.

Godrej Consumer is down 1.68 percent after it acquired additional 4.63 percent stake in Darling Group