Nifty rallies 160 points this week; financials, metals surge

The benchmark Nifty maintained positive momentum throughout the week and gained more than 160 points on the back of strong liquidity. It sustained above another milestone - 5600 level but failed to cross 5650 on Thursday.

Foreign intstitutional investors (FIIs) have been bought more than Rs 40,000 crore since June and Rs 60,000 crore in calendar year 2010. Claiming that recent inflows into the markets were the result of reallocation of existing funds, Samir Arora of Helios Capital said that these flows will continue if markets grind higher. He said he has turned bullish on India in the past three months and sees a 10% blowout rally from here. However, "a 15% rally is unlikely," he said.

Naresh Kothari of Edelweiss Capital said there is a distinct possibility of the bourses touching old highs of 21,000 on the Sensex and 6,000 on the Nifty if liquidity continues to surge. However, it is difficult to say whether this would happen in the next 6-9 months or over 12-18 months. ''If it happens over a longer period, then obviously fundamentals would have caught up and therefore you are a little bit more confident about the way the markets have moved. But if the surge happens in the short-term, the markets will again get into some kind of a correction zone, after they touch any of these numbers.''

On the other side, domestic institutional investors were the net sellers in the same period. According to Naresh Kothari domestic institutions have kept some money on the sidelines. ''Fundamentally things have become fairly expensive across a few companies. And this is not a fundamentally-driven market; it is purely technically-driven.''

Today's rally was led by financials followed by infrastructure, realty, select auto and metal companies' shares. However, private power and healthcare companies' shares along with ITC, Bharti, Tata Motors, Sterlite, TCS, Wipro, Reliance Communications and ACC witnessed selling pressure, which capped the gains.

The 30-share BSE Sensex closed at 18,799.66, up 132.95 points or 0.71% and the 50-share NSE Nifty rose 32.20 points or 0.57% to settle at 5,640.05. For the week, both benchmarks rallied 3% each.