The benchmark indices snapped a three-day losing streak on Friday on the back of positive global cues and gains led by IT, energy and realty stocks, ending the week higher by 1 per cent.
The 30-share BSE Sensex gained 767 points, or 1.28 per cent, to close at 60,686, while the 50-share Nifty rose 229 points, or 1.28 per cent, to 18,102. The indices regained the psychological 60,000 and 18,000 marks, respectively.
Tech Mahindra was the top gainer in the Nifty index, rising around 4 per cent, followed by Hindalco, Wipro, HDFC, and Infosys. Bajaj Auto, Tata Steel, Axis Bank, and NTPC were among the laggards.
The tapering of liquidity by the Fed, fears of rate hikes in the US occasioned by the retail inflation number rising past the 6 per cent mark and the sustained selling by foreign portfolio investors (FPIs) impacted the markets this week.
FPIs on Friday bought shares worth Rs 511 crore after selling shares worth Rs 1,637 crore on Thursday, BSE’s provisional figures show. Since October, they have pulled out over Rs 16,000 crore from the domestic market, paring their year to date purchases to Rs 43,288 crore compared with Rs 37,670 crore worth of purchases by domestic institutional investors.
Analysts said the hike in interest rates could trigger FPI outflows from India. The near-zero interest rates and aggressive bond purchases by the Fed have propelled a massive rally in equity markets, including India, since last March.
On Friday, most Asian indices closed higher, with South Korea’s Kospi clocking the most gains (1.5 per cent). In China, a major Communist Party meeting ended with a resolution setting the stage for President Xi Jinping to remain the top leader for life. European shares traded largely flat but were on course to mark their sixth straight weekly gains, with high inflation and corporate earnings playing on the minds of investors.
“The earnings season has been quite satisfactory, but the likelihood of pressure on margins due to inflation, high commodity prices and labour shortages has been subject of discussion in the last couple of weeks. While the markets may trend towards the path guided by fundamentals, the likelihood of enhanced volatility kindled by external factors may continue to be a feature of the markets in the coming weeks,” said Joseph Thomas, Head of Research at Emkay Wealth Management.
The broader markets underperformed the benchmark indices by a wide margin, with the BSE Midcap and BSE Smallcap indices gaining 0.6 per cent and 0.3 per cent, respectively. All of the sectoral indices ended in the green, with the BSE IT (2 per cent), Telecom, Realty and Power indices gaining about 1.5 per cent each.
“Markets will first react to macro data in early trade on Monday. As the result season is almost behind us, the focus will shift back to global markets for cues. At the same time, traction in primary markets will keep investors busy. There are mixed sentiments in the markets so, we reiterate our cautious view on markets and let Nifty stabilise above 18,100 to change the bias,” added Ajit Mishra, VP-research, Religare Broking.