Oct 01, 2010
Indian equity benchmarks rallied for fifth consecutive week on back of consistent inflow of funds from foreign institutional investors (FIIs). The Nifty added 734.7 points (13.58%) and the Sensex 2446.63 points (13.59%) during the same period.
The upsurge in the Indian markets has created vigour among investors abroad. This, Naresh Kothari, Edelweiss Capital says continues. “The mood is quite upbeat on India and we feel the strong FII flows to India will continue. Most FIIs seem to be very bullish on India any which way, especially the long-only funds, those are the people who have been bringing in a lot of capital.”
FIIs were net buyers to the tune of more than Rs 27,500 crore since September 6, 2010, including Thursday's provisional data. On the other side, domestic institutional investors were the net sellers of more than Rs 11,500 crore since the same period.
Today the Nifty closed above another psychologically important level - 6100 led by buying across the sectors on first day of October series; even it touched 6150 in an intraday trade.
The upbeat mood was also led by Ayodhya verdict. The three-judge special Lucknow bench of Allahabad High Court ruled by majority that the disputed land in Ayodhya be divided into three parts and be distributed among the Sunni Wafk Board, Nirmohi Akhara and the party for 'Ram Lalla'.
On Friday, the 30-share BSE Sensex closed at 20445.04, up 375.92 points or 1.87% and the 50-share NSE Nifty rose 113.45 points or 1.88% to settle at 6143.40. The Nifty October futures ended at 32.6 points premium.
Amongst sectoral indices, the BSE Realty and Metal indices outperformed other indices - rallied 4% each. Capital Goods, IT, Auto and Power indices gained 2-2.7%. TECk, Healthcare, Bank and Oil & Gas indices were up 1.5-1.9%. Even the broader indices like BSE Midcap and Smallcap rose 1.5%. On the flip side, Hero Honda, Bharti and Reliance Communications were the only losers.
However, the experts looked cautious at these levels. Rahul Mohindar of viratechindia.com said the Nifty would pause a bit before making high of 6420-6450 levels. "If the markets can go and sustain close past 6,150 that would mean 6,420-6,450 in terms of a target gets set. But probably I think we are in for a pause because somewhere in these next 15-20 points on the Nifty, we would consolidate, take breathers down to about 5,950-6,000."
Dipan Mehta, Member BSE/NSE also looked bullish but sees correction. "Key resistance levels in the global markets have been breached and they too are trading in good positive territory. I think on the whole the factors continue to remain positive but correction could take place any time point of time, it could be swift and could be about 5 to 7% or thereabouts," he said.
Good auto sales numbers for the month of September also added confidence in today's rally. Mehta said, "At some point of time the base effect will catch up and growth rates will come down to low double digit. I do not think that is a cause for worry but on the whole the operating environment for the industry remains very favorable, volumes are picking up, cost are more or less under control and getting full benefit of operating leverages. Some of the companies expansion plans will come on stream over the next 6 to 12 months, export markets are also picking up. So this is a fantastic scenario for auto companies and from an investor point of view one should keep in mind that valuations are not out of whack they are quite reasonable whether it is a two wheeler space or the four wheeler space."