The market posted biggest ever monthly gains since September 2010, rising 11.5% led by highest monthly inflow of foreign money since November 2010. The Nifty closed tad below the 5200 mark while the Sensex rallied over 17000 level quite smartly.

Factors that steered the January rally included sharp appreciation in rupee, value buying by institutional investors, rate cut hopes, eurozone progress, better US economic data and Fed’s decision to keep rates near zero till the 2014.

The market managed to recover majority of yesterday’s losses on Tuesday. The Sensex rose 330.25 points or 1.96%, to close at 17,193.55 and the Nifty moved up 111.95 points or 2.20%, to end at 5,199.25.

Foreign institutional investors have bought more than Rs 10,500 crore worth of Indian equity shares in January – highest ever since the November 2010.

Capital goods, banks, metals and oil & gas led the rally in January as they heavily beaten down in 2011. However, technology sector underperformed due to weak eurozone.

Varun Goel, Head – PMS at Karvy Private Wealth said he would continue to hold his view of 20-25% of gains for the calendar year.

According to him, the key trigger for markets now is what RBI decides from here on. He says, if the RBI starts cutting repo from March itself then we would see rally to continue.

He says now the leadership should shift from largecap to midcap space. “Last year a lot of the mid caps got beaten down 60-70-80% – especially some of the sectors like PSU banking space and infrastructure. As and when we see a reversal of the interest rate cycle we would see some of these stocks bounce back very sharply,” he adds.

Today, the Bank Nifty shot up 4% led by rally in ICICI Bank post better than expected numbers in Q3. Its net jumped 20.25% to Rs 1,728 crore on improvement in non-performing assets (NPAs) while CNBC-TV18 had expected at Rs 1,621 crore. The stock surged nearly 6%.

Shares of HDFC Bank and SBI were up 2.5% & 3.5%, respectively. However, PNB fell 1.5% on disappointing numbers.

Index heavyweight Reliance Industries moved up 2.5%. Capital goods major BHEL, which tanked 11% yesterday, rebounded with 2% gains.

Metals too saw buying interest; Hindalco topped the buyers’ radar, rising 6.65%. Tata Steel, Jindal Steel and Sterlite were up 2% each while Coal India tanked 3%.

For more visit: Moneycontrol.com

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