Benchmark indices gained 1% this week, partially recovering from the previous week’s losses, as the Street appeared undeterred by the US government shutdown. The rebound in Indian equities was largely aided by the renewed buying from foreign institutional investors (FIIs) and stability in the Indian rupee.
On Friday, however, Indian markets ended flat and traded in a narrow range as investors remained cautious ahead of the earnings season that kick-starts in the following week.
A third consecutive monthly fall in India’s services PMI for the month of September also restricted fresh buying. The 30-share BSE Sensex ended at 19,915.95, up 13.88 points, or 0.07%, from Thursday’s close, while the broader Nifty settled at 5,907.3, down 2.4 points, or 0.04%.
According to provisional data from stock exchanges, FIIs net purchased $88.11 million of Indian equities on Friday. For the week, overseas funds bought $117.55 million in equities, compared with $108.26 million in the previous week and $980 million in the week ended September 20.
This week, the Sensex advanced 190 points, or 1%, while the Nifty rose 74 points, or 1.3%, compared to a 2.5% (536 points) and 3% (179 points) fall for the Sensex and Nifty, respectively, in the previous week.
The gains were not restricted to frontline stocks alone. Broader markets outperformed the benchmark indices for the second time in the last three months. The BSE mid-cap and small-cap indices gained 2% and 1.3%, respectively, during the holiday shortened week. Realty, banks, IT and automobiles stocks led the rally this week — gaining in the range of 2.5-4.5%. Notable gainers include Bajaj Auto (6.4%), HDFC Bank (5%), Tata Consultancy Services (TCS) (4.4%), Maruti Suzuki India (4.4%), Hindalco Industries (3.5%) and Tata Motors (2.9%).
Tata Motors touched its life-time high on Friday after Deutsche Bank upgraded the stock to ‘buy’ from ‘hold’ and assigned a target price of R400, citing improvement in global macros and robust sales from Jaguar Land Rover — its UK subsidiary — especially in China and the US that would largely offset low volume growth in the Indian market.
On the losing side, Dr Reddy’s, Hindustan Unilever, ITC, ONGC and NTPC declined in the range of 1.7-3.5% during the week. Market breadth was strong, with 21 out of 30 Sensex companies ending the week on a positive note.
In global markets, major Asian indices ended the week on a flat-to-negative note, with Nikkei 225 (-5%), Shanghai Composite (-2.1%) and FTSE Straits Times (-2.25%) emerging as the major losers. Major European and US indices were trading down 1-2% for the week at the time of going to print.
Experts said global cues will impact the markets in the near term, adding that developments surrounding the on-going US government shutdown could swing markets. The rupee’s movement is another key factor and will impact the direction of Indian equities in the next couple of weeks. The Nifty is broadly seen trading in the 5,950-5,700 range, they added.