Nifty Sees Highest Daily Gains In The Last 4 Years

The CNX Nifty today (September 10, 2013) closed at 5896, which is 3.8% above the previous closing. This is in the backdrop of a 1.6% rise that we saw in the last trading session on September 6, 2013. However, during the intra-day trading, the Nifty and Sensex both crossed the psychological barrier of 6000 and 20000 respectively before settling at 5896 and 19997.

The 3.8% rise in the Nifty is the highest daily gain in the last four years. The last time we saw such a gain was on May 29, 2009, when the Nifty rose by 3.87%. Since the beginning of January 2007, or in the last 1662 trading sessions this remains the 28^th best rise in the value of Nifty.

Today’s gain along with some smart rise in the value of Nifty in earlier trades makes the two week trailing returns one of the best in the last 4 years. The last time we witnessed such returns was in the two weeks ending on July 24, 2009.

This sharp rise in the value of the frontline index once again raises the question as to whether the worst of 2013 is behind us, or is this merely a sucker rally? We believe that though the indices have demonstrated a smart rise in the last few trading sessions, hardly anything has changed substantially on a fundamental basis – be it at the macro-economic or micro-economic levels. Therefore, we remain sceptical about the sustainability of this rise. Hence, one should take this opportunity to exit from profit-making positions.