Recovery continues with another 5 per cent surge this week

In the last week of October, there would have been hardly anyone in the markets who expected a sharp recovery which would take the Sensex close to 8500 by second week of November. The Sensex had slumped close to 7600 and a majority of the analysts had turned bearish, predicting further declines.

However, the markets never fail to surprise either on the upside or downside. In just two weeks with only seven full trading sessions, markets have recovered more than three-fourths of their decline from the highs. Almost predictably, all the analysts who were bearish only two weeks back have turned extremely bullish now. One would be hard pressed to find someone who is advising caution these days.

Sharp fall in crude oil prices and strong recovery across global markets have helped the markets to recover fast. The heavy short positions built during the days of correction and the first few sessions of the recovery were covered, which added further strength to the rally.

The frontline indices were extremely strong in the first two days of the week with the Sensex gaining close to 250 points. The markets consolidated on Wednesday and Thursday without any major selling pressure and closed the week with another sharp surge on Friday.

Oil and engineering stocks were among the biggest gainers during the week. Stocks of oil marketing companies rose sharply as they are expected to return to profitability after the fall in oil prices. Another sector which outperformed during the week was automobiles, especially two-wheelers. Select technology stocks like Wipro and Satyam also saw significant gains during the week.

The Sensex added 398 points or close to 5 per cent during the week and the Nifty went up by 130 points or 5.35 per cent over the week.

Mid-caps mirrored the movement in frontline stocks during the week and the overall gains were only marginally lower than large stocks. After the strong rally on the first two days, the mid-caps also consolidated during the middle of the week before resuming the up trend on Friday. The CNX Mid-Cap 100 index gained 163 points or 4.6 per cent during the week.