Relief at Street; here comes the Santa Claus rally

Until the afternoon the rally on the Street did not seem promising. The Indian markets started with a gap up on the good global cues and then held that gap through the first four hours of trade. There was no great follow up, volumes were lackluster and midcaps were not doing very well.

"However, post 2:45 in the afternoon, the market suddenly took off and the cruised past 4,650 levels to go to all the way to 4,700 displaying a spectacular finish. It is a very classic relief rally after being deeply oversold over the last couple of sessions, since a pullback was always overdue," said CNBC-TV18's Udayan Mukherjee.
The big question now is whether this a Santa Claus pullback rally that extends through the end of the year and takes us to levels closer to 4,900-5,000 levels or is it going to fizzle out in just a couple of days?
"Days ahead of the year end cheer, the market saw a powerful pullback. Although, many such relief rallies have been seen in the last couple of months, the Street is eyeing as the year-end rally that has begun from that base of 4,550 level," said Mukherjee.
The most beaten down sectors today rallied the most. ICICI Bank got back to Rs 700 plus, and Axis Bank, Kotak Mahindra Bank, State Bank of India and HDFC Bank too did well. Metal stocks like Sesa Goa and SAIL were up, auto stocks like M&M and Maruti also did well. However, the index managed to rally as the heavyweights Reliance shot up 5%, Bharti escalated by 4% and BHEL which staged a bit of a rally today.
On the way down, IDFC was an underperformer and slipped down into double digits today.
"Volumes were weak for the first half of the session, but they picked up quite a bit in the last 45 minutes as the market broke past 4,650. Nevertheless, the breadth was not great," Mukherjee pointed out.
The trade today had two declining stocks compared to an advancing stock on a day when the market put on 3% and the midcap index with a 1.5% move is still well short of the 3.5% rally seen in the Sensex and the Nifty. "The broader market did not quite participate to the same extent but sometimes relief rallies begin that way. We did see some good comebacks in stocks like Titan, Jain Irrigation, Sintex, Delta, IVRCL, VIP and Arvind," Mukherjee added.
The losers for the day include Pantaloon, Apollo Tyres, IRB Infra, Ashok Leyland, HOEC and Exide which did not quite participate in the pullback today.