Nifty at 10,000 as North Korea fear eases

Highest close since August 8 for the 50-share index; pullback led by MF buying

The benchmark Nifty 50 index on Monday closed above the psychological mark of 10,000 for the first time after August 8. The Nifty gained 0.72 per cent, or 71 points to close at 10,006, while the BSE Sensex added 195 points, or 0.61 per cent to close at 31,882.16. The gains were supported by improvement in investor sentiment after an anticipated North Korean missile test failed to materialise and Hurricane Irma struck the US with less force than feared, Bloomberg reported. Safe-haven assets — including gold, the Japanese yen and the Swiss franc — declined, while Asian and European equity markets rallied.

“The markets are again at 10,000. It is a reflection of the growth potential of the Indian economy. We expect the markets to consolidate at these levels, as the salutary effects of the reforms undertaken over the last year are yet to materialise in corporate earnings. Given the liquidity flow especially into mutual funds (MFs), the downside is limited,” said Arun Thukral, MD & CEO, Axis Securities. “We are positive on auto and auto ancillary, private banks with retail focus, infra, textiles, consumer non-durables and select FMCG stocks based on the rising consumption and discretionary spends.”

“Markets across the globe took a breather from the recent sell-off. Investors heaved a sigh of relief as the North Korean dictator abandoned his weekend plans of launching another missile,” said Karthikraj Lakshmanan, senior fund manager–equities, BNP Paribas Mutual Fund. “Investors would be wise to not throw complete caution to the wind as markets assess the possible economic impact of Hurricane Irma.”

While foreign institutional investors (FIIs) continued to take money off from the Indian markets, the selling has become less intense in the past few sessions. On Monday, overseas investors sold shares worth Rs 393 crore, provisional data showed, while on Friday they had sold shares worth Rs 130 crore. Since August 1, the average daily FII selling has been Rs 600 crore, weighing on the performance of the market. The Nifty had declined four per cent to 9,711 on August 11 from its all-time high of 10,114.6 touched on August 1. The Sensex had dropped 1,362 points, or 4.2 per cent from 31,213 to 32,575 during the same period. The latest pullback in the market has been led by mutual fund (MF) buying. Since August 1, MFs have bought shares worth Rs 20,000 crore. Domestic equity funds are flush with money because of robust monthly investor flows, coupled with high cash levels. The India VIX index dropped five per cent to 12.36 on Monday, signalling easing of market volatility.

Experts said the markets would take cues from the consumer inflation data to be released on Tuesday. Higher retail inflation could dim the prospects of further rate cuts from the Reserve Bank of India (RBI).

The Bank Nifty Index on Monday gained 1.24 per cent to 24,672. The gains were led by private sector players such as HDFC Bank and YES Bank. 

The major gainers were IndusInd Bank, which added 5.55 per cent, followed by Tata Power which rose 5.1 per cent. On the losing side, were Indiabulls Housing and Mahindra & Mahindra, which fell about one per cent each.