With opinion polls indicating a strong showing by the NDA, the benchmark indices touched new highs backed by improving macroeconomic data and a stronger belief that India will have a stable and an efficient government. Positive global cues further and easing of East-West tensions over Ukraine further aided investor sentiment for Indian markets.
Foreign institutional investors (FIIs), who have been betting heavily on the BJP’s Narendra Modi to lead the next government at the Centre, continued with their buying spree for the 17th consecutive session on hopes.
FIIs net bought nearly $422 million of Indian shares in the cash segment — the biggest single-day purchase since December 9, showed provisional data from stock exchanges. In the last 17 sessions, FIIs buying has crossed $1.5 billion.
As per the latest national poll projection by CSDS on Thursday, the BJP-led National Democratic Alliance (NDA) will win 211-231 seats in the Lok Sabha election while the Congress-led UPA would end up with 107-127 seats.
Gaining for the fourth consecutive session on Friday, the Sensex surged 1.89% (405.92 points) — the biggest single-day move in more than three months.
The 30-share gauge neared the 22,000 mark in late afternoon trade, and eventually settled at 21,919.79. The Nifty crossed the crucial psychological level of 6,500. The index of top 50 stocks on the NSE closed at 6,526.65, up 125.50 points or 1.96%.
“Optimism of shrinking current account deficit is likely to boost the rupee and prompt foreign investors’ investments further... Nifty has achieved our target of 6,400. Positive momentum is likely to continue,” said Sirshendu Basu, chief
investment strategist, Standard Chartered Index heavyweight Reliance Industries gained 5.7%, the biggest daily increase in over five years. On Thursday, US equities touched another high as jobless claims data declined to a three-month low. Data showed the number of people seeking unemployment benefits dropped by 26,000 last week, to a seasonally adjusted 323,000 as layoffs remain at pre-recession levels.
“The positive trend is very much intact until Nifty holds 6,200 levels and any dip can be considered as a good buying opportunity,” said Dhananjay Sinha, head, institutional equities, Emkay Global Financial Services.
Cash turnover on the BSE and NSE on Friday touched Rs 22,559 crore, the highest in more than a year, Bloomberg data showed. Stock exchanges clocked a combined turnover of Rs 25,551 crore on February 28 last year.
Market breadth was strong with 22 out of 30 Sensex companies moving up. Nine out of 12 sectoral indices on the BSE ended positive. Banks and interest rate sensitives continued to lead the rally.
The investment cycle is showing signs of bottoming out as government orders have started to tick up, said Inderjeetsingh Bhatia, analyst, Macquarie Capital Securities India.
“FY15 brings hope of recovery in the investment cycle. The investment cycle is showing signs of bottoming out as government orders have started to tick up... Capital-goods quarterly data indicates the worst is over,” said Bhatia.
The BSE Realty index surged 5.4% on Friday, taking the weekly tally to nearly 13%. The BSE Capital Goods index rose 4%, while shares of banking and financial institutions advanced 5.5%.
Bharat Heavy Electricals surged 6.3% on the BSE. Private sector lenders ICICI Bank and Axis Bank surged nearly 6% each.
Bharti Airtel gained nearly 5.5%. Rating agency Standard & Poor's upgraded Airtel to ‘BBB-’ on account of reduced debt and an improved regulatory environment.
Technology and healthcare stocks witnessed profit booking as the rupee surpassed the 61 per dollar mark for the first time in three months. The rupee closed at 61.08 against the dollar, after touching an intra-day high of 60.945, Bloomberg data showed.
IT major Infosys lost 2.5%, while Wipro declined more than 3%. TCS with a 0.7% decline dropped the least. However, Dr Reddy's Laboratories was the biggest loser on Friday. The scrip fell 3.6%.