The Nifty and the Sensex gained in excess of 0.75 per cent on New Year’s Day led by bullishness in and banking stocks.
A deal to delay implementation of the fiscal cliff in the US also added to the sentiment.
The Nifty closed at 5951 up 46 points while the Sensex closed at 19581 up 154 points.
“While the fiscal cliff has been likely averted, the deal has only postponed the spending cuts by two months, while implementing higher taxes on incomes of individuals earning above a threshold. Further negotiations will be needed to resolve the spending cut issues and even the existing agreement has to be passed by the House of Representatives, which will likely happen,” said Dipen Shah, Head –PCG Research Kotak Securities.
“The markets overlooked the worse-than-expected domestic data on current account deficit, core sector growth and fiscal deficit. With stability possibly returning in the developed markets, focus will now shift to corporate results and also to the domestic reforms initiatives which, we believe, should be taken up and implemented, for the markets to move up in a sustained manner,” he added.
An Edelweiss Financial Services report expects current account deficit(CAD) for FY13 at $74 billion (4 per cent of GDP). In the coming quarter (Q3), CAD is expected to remain elevated as export slowdown continued and gold imports picked up.
However, we do foresee improvement in Q4 as improving external demand helps exports and as gold imports normalize after seasonal uptick, said the report while revising its earlier CAD estimate of $ 65bn (-3.3% of GDP).
Volatility was down 8.43 per cent and the volatility index India Vix closed at 13.69.