Sensex up 81 points; regains 17K mark after two months

The benchmark has gained 10 per cent so far this month.

After nearly two months,the BSE Sensex closed above the 17,000 mark to 17,077.18,up 81 points,on sustained buying as the RBI policy shifted focus to pushing growth from taming inflation,and investors settled this months derivative contracts amid strong overseas markets.

The benchmark has gained 10 per cent so far this month. In the last five sessions,the Sensex has moved up by 625.71 points or 3.80 per cent,with foreign funds pumping in over $1 billion so far this month. FIIs made net investments of over Rs 1,100 crore on Wednesday. Investor confidence got further boost after the RBI cut the cash reserve ratio (a portion of deposits banks keep with RBI) by 0.50 percentage points to 5.5 per cent a move that would infuse Rs 32,000 crore in the financial system,easing liquidity. The index had gained 244 points on Tuesday.

One should not get carried away with Januarys rally,which is partly driven by FII flows. Be vigilant and look at the bigger picture. In the short-term,things could turn bad again. Apart from the domestic risks mentioned,markets might be hit by unforeseen accidents on the external front,especially from Europe, said Amar Ambani,Head of Research,IIFL.

The midcaps and smallcaps outperformed the Sensex today as FIIs were seen resuming their buying after the RBI decision to cut CRR and signalling a reduction in interest rates in their next mid quarter review on March 15 or at the Monetary Policy for FY 2012-13 that will be announced on April 17, said Alex Mathews,Head of Research,Geojit Financial. Metals,PSU,tech,auto,consumer durables and IT stocks attracted good buying,with 12 of the 13 sectoral indices making gains. The National Stock Exchange 50-issue index Nifty also gained 30.95 points or 0.60 per cent to end at more-than 10-week high of 5,158.30.