Equity markets clocked in gains for the second week running as political developments and some positive economic indicators kept sentiment buoyant and led to continued buying activity from FIIs.
For the week, the Sensex and Nifty gained 0.98% and 1.36% even though markets remained subdued on Friday ahead of the state election results due over the weekend and US jobs data to be released late on Friday.
On Friday, the BSE benchmark index was up 0.18% at 20,996.53, while the 50-share Nifty gained 0.3% at 6,259.90. Sectoral indices like BSE Power Index, however, continued their run-up gaining 2.27% on hopes of a pick up in the investment cycle. In line with trend, FIIs bought $140 million worth of equities on Friday while DIIs sold $121 million. Over the week, FII buying added up to $589, taking the two-month tally for equity inflows to $4.6 billion.
DIIs, however, have continued selling and have offloaded $3.9 billion worth of equities over the period.
The strong inflows along with an appreciation in the rupee has meant that the benchmark indices have outperformed Asian peers for the second week running.
In dollar terms, Sensex and Nifty gained 2.71% and 3.09% this week. In comparison, the Shanghai Composite was up 0.92% and the Hang Seng was down 0.61% over the week.
According to experts, a strengthening in rupee is also helping sentiment in the markets.
Banks have raised about $34 billion through foreign currency non-resident bank (FCNRB) deposits. Apart from this, improvement in trade deficit has been a boost for the local currency, said Vinay Khattar, head (research), retail capital markets, Edelweiss.
Trading activity during the week was dominated by cyclical stocks which drew investors interest on the hopes of an eventual pick up in the investment cycle. The BSE Capital Goods Index and BSE Power Index gained 4.7% and 4.56%, respectively, while the BSE Metal Index was up 3.27% during the week.
Among individual stocks, Tata Power gained the most at 10.8%, followed by Jindal Steel & Power (10%), BHEL (9.8%) and ICICI Bank (7%).
Experts feel domestic factors will play a key role in determining near-term movement of markets. Apart from the state election results, consumer-price inflation (CPI) and industrial production (IIP) data will be the major triggers for the markets, said Pankaj Pandey, head (research), ICICI Securities.
Sugar stocks rally after R7,200-cr drip to mills
Stocks of UP-based sugar companies surged after a ministers panel recommended a slew of measures for the cash-strapped UP sugar mills.
Oudh Sugar Mills gained 12.43%, Dwarikesh Sugar Industries was up 5%, Mawana Sugars gained 4.98%, Bajaj Hindusthan gained 5.46% while Balrampur Chini Mills was up 2.56%.
The ministers recommended a slew of incentives for the sugar industry, including 12% interest subvention on a R7,200 crore loan from banks.