Backed with record high closing of Dow Jones Industrial Average and Nasdaq Composite Index, the benchmark Sensex surged near to its three week high. led by information technology (IT) and technology shares as US equity markets made new all time highs on hopes of economic revival, Sensex advanced by 119 points to 21,193.58 and the broader index Nifty gained 34.90 points to 6,313.80.
Analysts said that the overall sentiment towards IT and technology sectors improved on hopes of recovery in US economy and since US is the biggest market for Indian IT companies, the IT index surged by 1.71 per cent. Tata Consultancy Services, country's biggest software exporter, was the biggest gainer on the Sensex after it surged by 2.98 per cent. Infosys also rose by 1.41 per cent and made a new life time high.
Ten of the 12 BSE sectoral indices gained as IT index led the market rally followed by technology and healthcare indices as they climbed 1.39 per cent and 0.7 per cent respectively. Small cap index outperformed the Sensex and surged by 1.15 per cent.
A strong recovery in the rupee also helped in supporting the market rally. The domestic currency rose by 31 paise and closed at Rs 61.85 per dollar as exports resorted to dollar selling. Rupee recovered the most since December 16 and was helped by a sharp fall in the dollar overseas along with continous buying of stocks by foreign institutional investors (FII). The dollar index, which tracks the performance of the US currency against six major global rivals, was down 0.62 per cent.
With 2013 coming to an end, Sensex in this calendar year has advanced more than 9 per cent and as per data provided by Securities Exchange Board of India, FIIs pumped in Rs 6.85 lakh crore in the Indian stock markets.
The market breadth was positive as 1,384 stocks gained and 1,170 declined. Total turnover moved down to Rs 1,831.45 crore from Rs 1,941.19 crore yesterday. Foreign institutional investors bought a net Rs 295.76 crore of shares on Friday, according to provisional data on the stock exchanges.
Meanwhile, the Reserve Bank of India (RBI) announced a decline of $ 12.6 million in the country's forex exchange for the second consecutive week to $ 295.50 billion, in the week ended December 20. After five weeks of gains, courtesy special swap window opened by RBI, the reserves had declined by $192.8 million to $ 295.51 billion in the previous week.
Foreign currency assets (FCAs), which form a major part of the overall reserves, decreased by $ 94.7 million to $ 268.469 billion for the week under review, RBI further added. FCAs, expressed in dollar terms, include the effect of appreciation or depreciation of the non-US currencies such as the euro, pound and yen, held in reserves.
The gold reserves remained unchanged at $ 20.603 billion, the central bank said. The special drawing rights declined by $ 9.1 million to $ 4.431 billion, while there was a $ 91.2 million spike in country's reserve position with the IMF at $ 1.999 billion during the period, the RBI data showed.