Markets bounce back on FII buying

The domestic equity indices today bounced back strongly. The rise was due to positive opening of European markets and buying by funds in anticipation of good fourth-quarter earnings by companies.

The Bombay Stock Exchange (BSE) Sensex rose 218 points, or 1.23 per cent, to close at 17,933. Yesterday, the index had fallen 255 points in line with global markets after news of the Greek crisis worsening.

The broader index, S&P CNX Nifty of the National Stock Exchange (NSE), was up 57 points, or 1 per cent, at 5,261. On a weekly basis, key stock indices were up for the ninth continuous week.

Provisional data showed foreign institutional investors (FIIs) bought stocks worth Rs 233 crore, while domestic ones were net sellers of Rs 66 crore in the cash segment.

The rally was led by HDFC, Tata Motors and Reliance Industries. HDFC was up 4.4 per cent to Rs 2,844, Tata Motors gained 4.5 per cent to Rs 808 and Reliance Industries rose 1.8 per cent to 1,123.

Market experts say the bull run is likely to continue as the earning season begins next week. “The markets are rising only due to positive news flow. Corporate earnings are likely to be robust, which will keep FII inflows healthy for some time. In fact, one of the biggest FIIs, Templeton, has issued a statement that India is poised for better growth than China in the near future, which is why stocks are rallying,” said Kishor Oswal, director of Mumbai-based CNI Research.

Ambrish Baliga, vice-president of equities at Karvy Stock Broking, says action in small and mid-cap stocks will continue in the coming days.

“High net worth and retail players are coming back, which is why small- and mid-cap stocks will remain in action for some time. For Nifty, there is strong support at 5,200 and it can rise over 5,600 in the next couple of months,” said Baliga.

The small-cap index outperformed the Sensex. It rose 1.27 per cent, while the mid-cap index was up 0.9 per cent. The market breadth remained positive, as 63 per cent, or 1,901 stocks, rose, and 33 per cent, or 995, fell.

Key indices in Britain, France and Germany rose 0.8-1.08 per cent.

The European Central Bank extended a helping hand to Greece yesterday by prolonging easier rules on debt and making it eligible as a security against cheap central bank cash.

Rising exports helped boost Germany’s trade surplus more than expected in February, another sign that Europe’s largest economy was on the path to recovery.

Industrial output in France, however, was unchanged in February after rising in January. This underlines the challenges still facing the euro zone’s second-largest economy.

In Asia, equity benchmarks in China, Japan, Taiwan, Hong Kong and Singapore rose 0.3-1.56 per cent.