Foreign buying pushes indices to new highs

Sensex reaches record high of 22,074, Nifty touches 6,591

Stock market indices on Monday soared to record highs, surpassing the milestones achieved last week, as the gush of money from foreign institutional investors (FIIs) continued uninterrupted amid the rupee’s strong run against the dollar.

While bank shares led the bull charge, activity in broader markets was restricted to a few, raising doubts on whether this rally would sustain. With many mid- and small-cap shares staying away from the euphoria, some analysts believe the foreign inflows could be from exchange-traded funds, which usually invest in Sensex stocks as a basket and are known to take short-term trading bets.

Speculation had it that a lot of such FII money had flown into Indian stocks lately in the wake of a market rally on expectations of the Narendra Modi-led Bharatiya Janata Party forming the next government. (SCALING NEW PEAKS)

The BSE Sensex touched an all-time high of 22,074 but closed lower at 22,055, up 300 points, or 1.4 per cent, from previous close. The NSE Nifty hit its all-time high at 6,591, up 89 points, or 1.4 per cent. The rupee closed at 60.78 a dollar, up 0.2 per cent from its Friday close.

“The current rally is being driven largely by FIIs, which do not invest in the mid-cap segment. On the other hand, domestic investors, who buy these small- and mid-cap stocks, have stayed away from the markets,” said Raamdeo Agrawal, joint managing director, Motilal Oswal Financial Services.

The CNX mid-cap index was up 0.5 per cent, while the CNX small-cap was up a mere 0.3 per cent. On BSE, losers outnumbered gainers in the 1,557:1273 ratio, showing the strength was largely restricted to large-cap stocks, which form the benchmark indices.

On Monday, FIIs net-bought shares worth Rs 1,465.62 crore, according to provisional data. FIIs have poured Rs 13,000 crore into Indian stocks in the past ten days. Since February 12, these investors have remained net-buyers in each trading session, barring one. In this period, they bought shares to the tune of Rs 19,000 crore.

“FIIs are as fragile as retail investors,” said Agarwal. “It is very difficult to figure out what they are thinking. Today, they are feeling good because the currency has stabilised and they expect a pro-business government to come to power after the elections. So, till then, there will be no dearth of money coming into the markets,” he said.

The banking index, Bankex, jumped 2.7 per cent on Monday, as traders covered their short positions in various stocks ahead of the Reserve Bank of India’s credit policy on April 1. More than 130 stocks continued to move from strength to strength on BSE, in line with moves in the benchmark indices. Those on the Nifty include GAIL, ONGC, IndusInd Bank, Kotak Bank and ICICI Bank. Elsewhere in Asia, Hong Kong’s Hang-Seng was up 1.9 per cent, while Japan’s Nikkei gained 1.7 per cent. The Shanghai index was up 0.9 per cent and South Korea’s Kospi rose 0.5 per cent.