Markets post third straight weekly gain

Rate cut hopes, positive global market bolster scrips, though declines outnumbered gainers

The Indian markets posted their third straight weekly gain on Friday, bolstered by positive global markets and hopes of interest rate cuts by the central bank at its meeting early next month.

The benchmark Sensex and Nifty indices have gained a little more than two per cent for the week and nearly four per cent in May, following sharp correction in the previous two months. Stability in foreign flows on the back of improvement in sentiment towards risky assets has seen Indian equities post a healthy recovery, even as following a tumultuous April, corporate earnings have disappointed.

The 30-share Sensex on Friday ended at 27,957.50, up 148 points, or 0.5 per cent, while the broad-based Nifty ended at 8,458.95 up 37.95 points, or 0.45 per cent. The Sensex was trading around 27,000 during the start of the month.

“This week, we saw the markets edging higher on rate cut hopes despite the volatility brought by the fourth quarter results of heavyweights. Such volatility is likely to continue, as about 40 per cent of Sensex constituents' results are awaited. On the positive side, foreign outflow has slowed and domestic investors have been active,” said Vinod Nair, head-fundamental research, Geojit BNP Paribas Financial Services.

According to provisional data, foreign institutional investors (FIIs) on Friday did net buying of Rs 200 crore of shares. Domestic investors were buyers of a similar amount.  In the past one week, FIIs were net buyers on more occasions, providing critical support to the market.

“It is crucial that we have positive flows from foreign as well as domestic investors in the coming week to sustain the momentum. Derivatives expiry next week will also bring in its set of volatilities in the coming week,” said Ravi Shenoy, vice-president at Motilal Oswal Securities.

On Thursday, the S&P 500, a key benchmark for US stocks, closed at a record high after disappointing jobs data raised expectation that the US Federal Reserve rate increase would come only later in the year.

Market experts said the strong momentum seen in the global market last week has to sustain for the Indian markets to perform well.

On Friday, the market breadth was mixed, as declining stocks slightly outnumbered the advancing ones. Among Sensex companies, HDFC, Tata Consultancy Services and Sun Pharmaceutical Industries were the biggest gainers, rising a little over two per cent each. State Bank of India ended two per cent lower after gaining as much as five per cent, after a better-than-expected profit and a drop in bad loans.

 

Analysts say the Indian markets could continue to gain, having managed to close above crucial technical levels.

“It was a good week for Indian equities, with the major indices decisively closing above the 200-day moving average, a major technical indicator. The undertone in the global equity markets also continues to be buoyant,” said Sachin Shah, fund manager, Emkay PMS.