The benchmark Sensex reclaimed the 38,000-mark on Friday, while the rupee closed at a seven-month high against the US dollar on the back of accelerated buying by foreign investors. Foreign portfolio investors (FPIs) bought shares worth Rs 4,323 crore on Friday.
Global funds have pumped in over Rs 38,000 crore (about $5.5 billion) into domestic equities since February 20, helping the Sensex rebound 2,671 points, or 7.6 per cent, from its 2019 low.
After gaining as much as 500 points, the Sensex ended 269 points, or 0.71 per cent, higher at 38,024, while the Nifty50 climbed 84 points, or 0.74 per cent, to end the week at 11,427.
The benchmark indices climbed nearly 4 per cent during the week — their best weekly advance since November 2018. The rupee ended at 69.1, up 0.4 per cent, over the previous day's close of 69.35 against the dollar. This was the highest close for the rupee since August 10.
“We have witnessed foreign fund flows this entire month. Most global markets began to rally much earlier. We are finally seeing India catch up. Easing of geopolitical tensions and hopes of a stable government coming to power have helped the market sentiment,” said Rajat Rajgharia, chief executive officer of institutional equities, Motilal Oswal.
The decision by the US Federal Reserve to put on hold the rate-hike cycle has given fresh impetus to the equity markets after a lacklustre performance in 2018.
The Sensex has now gained 14 per cent from its lows in October 2018. The index is now less than 900 points, or 2.3 per cent, away from its all-time closing high of 38,897, touched on August 28, 2018.
Not just the large-cap, but mid- and small cap indices also have participated in the rally. “We have seen a sharp rally in small- and mid-cap stocks. Small-cap stocks are up by double digits in the past three weeks.
We expect earnings growth will come back and that will be the primary driver of the market. In the past four years, the rallies were led by re-rating of multiples, the next three years will be about earnings growth,” said Jyoti Jaipuria, founder, Valentis Advisors.
On Friday, however, the market breadth was mixed, with the number of declining stocks outpacing advancing stocks by a small margin.
Of the 30 Sensex components, 20 advanced, led by Kotak Mahindra Bank, which rose 4.3 per cent, followed by ONGC, Power Grid, and Tata Consultancy Services. Hindustan Unilever fell over 2.2 per cent, leading the losses in consumer stocks.
YES Bank fell nearly 2 per cent, while ITC declined 1.5 per cent. Reliance Industries' shares fell 1.4 per cent after making new record highs a day earlier.