The markets welcomed the New Year on an optimistic note. Last Friday,the Sensex ended the week with a gain of nearly 6.7 per cent over the previous week. The major gainers this week were metal and realty,which grew by 12.3 per cent each over their previous weeks close. With a gain of just 1.4 per cent,FMCG gained only marginally last week.
Inflation fell to a 10-month low of 6.4 per cent for the week ended December 20,2008 from 6.6 per cent in the previous week. Last Friday,the government gave the economy a second stimulus,allowing industry to borrow more abroad and foreign institutional investors to invest more in the country. In addition,the Reserve Bank of India slashed the benchmark repo and reverse repo rates by 100 basis points each to 5.5 per cent and 4 per cent respectively.
Says Hitesh Agrawal,head of research,Angel Broking: The markets have factored in the second stimulus package and the rate cuts. The realty sector has reacted positively to the lower rates. The overall market outlook for 2009 remains positive. The global scenario is expected to improve in the latter half of the year. One should remain bullish on sectors such as banking and telecommunication. In the first half of the year,it is expected that defensive sectors will continue to do well. In the latter half of the year,as interest-rate sensitive sectors like auto and banking could pick up. FMCG is expected to continue doing well as lower input prices are expected to improve the margins of this sector. Banking is expected to profit from treasury gains.