Benchmark indices rallied to yet another record closing on Friday and the rupee breached the 60-mark against the dollar for the first time in eight months as overseas funds continued their buying spree for the 14th consecutive session.
The Sensex advanced 0.57%, or 125.6 points, to a record high of 22,339.97 and the Nifty gained 0.82%, or 54.15 points, also to a record high of 6,695.90. The gauge of top 50 shares crossed its crucial psychological level of 6,700 in Friday's trading. Data also showed that 163 stocks on the BSE hit their 52-week high on Friday. The rupee closed at 59.8900 against the dollar, up 0.7% from Thursday's close. The Indian currency has gained 4% since February 12, Bloomberg data showed.
Friday’s gains were led by power, oil & gas, banks, and real estate companies. All 13 sectoral indices on the BSE ended in the green, data showed. Twenty out of 30 Sensex companies ended in the green. Tata Power (4.54%), Hindalco (4.07%), SBI (3.41%), NTPC (3.29%) and Bharti Airtel (2.13%) completed the list of top five gainers on the BSE.
On the other hand, Bajaj Auto declined 0.76%, while ONGC and HDFC Bank fell by 0.35% and 0.27%, respectively. FIIs, the key drivers of Indian equity markets in over a decade, bought $228 million of Indian shares on Friday, leading to $1.255 billion of inflows this week.
Analysts said the improvement seen in key macro-economic data and hopes of a stable government have fuelled optimism among foreign institutions, who have pumped $4.16 billion into Indian shares since February 12. The tally stands at 3.83 billion for the current calendar year, data showed. US multinational investment banking, securities and investment management firm Goldman Sachs foresees further improvement in India's current account deficit (CAD) and trade deficit.
“India, in particular, has seen a sustained improvement in its trade balance in recent months... Our India economist expects the trade deficit to remain at low levels and the current account deficit to shrink meaningfully to below 2% of GDP in FY14, from 4.8% in FY13,” Goldman Sachs stated in its research note.
It was a bullish week, with the Sensex gaining for the third straight session and the Nifty taking its winning streak to seven consecutive sessions. For the week, the Sensex has gained 2.69%, or 586.22 points, while the Nifty has gained 3.12%, or 202.7 points, led by advances in banks and cyclicals.
The positive momentum was seen in broader markets with the BSE Mid- and Small-cap indices gaining 3.15-3.55% from the previous week. The BSE Power index gained 6.8%, while the CNX Bank Nifty and BSE Capital goods index, rose 5.5% each. BSE Metals rose 5.2% and BSE Realty gained 4.2%, taking the tally to nearly 18% in the last one month.
German banking and financial services firm Deutsche expects the rally in the mid caps to extend further, driven by economic recovery and hopes of a decisive electoral outcome.
Positive cues from global markets further aided the rally in Indian equities as worries over tensions between the East and West over Ukraine lowered. The Nikkei 225 index gained 3.3% and Hang Seng advanced 2.9% this week. Kospi, FTSE Straits Times, Thai index and the Jakarta Composite gained in the 0.5-2.5% range during the week.
Indonesian and Indian markets have been the two of the best performers in Asia, stated CLSA in its latest edition of 'Greed & Fear', adding that “market moves driven to a significant degree by growing optimism on pending elections... This is a reminder that, in the world of investing in emerging markets, sometimes politics can be the only thing that matters at least in the short to medium term. Greed & Fear recommends playing the momentum and staying overweight both markets,” stated the note.