Sensex rallies by 724 pts during the week

Similarly, the S&P CNX Nifty index of National Stock Exchange (NSE) also rallied by 206.95 points or 7.62 per cent to 2921.35 in the week.

A strong booster dose by the government, in the form of a fiscal stimulus package for the economy and rate cut by the central bank, aided a recovery on the bourses last week.

Besides the stimulus, after trading hours on December five, the government had lowered petrol prices by Rs 5 per litre and diesel by Rs 2 per litre – the first reduction since February 2007 – following over $100 a barrel slump in world oil prices from record highs in mid-July 2008.

” The fuel price cut will bring down inflation further and will provide further room for the Reserve Bank of India (RBI) to cut rates,” the brokers said.

Inflation based on the wholesale price index eased by 8 per cent in the year through November 29 2008, lower than previous week’s annual rise of 8.4 per cent, data released by the government on December 11 stated.

Inflation had surged into double digits in early June this year after an increase in state-set retail fuel prices, and peaked at 12.91 per cent on August 2, the highest reading since annual numbers in the current data series became available in April 1995, the brokers added.