The continuous faith re-imposed by foreign portfolio investors (FPIs) on Indian markets has lifted Nifty 50 above the 18,000-mark on Tuesday — the highest closing level since April 4. Both Nifty 50 index and S&P BSE Sensex have registered their fourth straight gains, by rising 0.75 per cent at 18,070.05 and 0.76 per cent at 60,571.08 respectively.
According to analysts, the current market buoyancy globally, including in India, is based on the expectation that inflation has peaked along with softening crude prices. On the back of this, FPIs started investing in equities, they said.
‘Momentum to continue’
“We are confident the market will continue to do well as levers for growth continue. India’s PLI scheme, China plus one strategy, India as among the fastest growing economies in the world and inflation continuing to remain soft are all indicators that the market should do well,” said Sunil Damania, CIO, MarketsMojo.
“India is in a very sweet spot where growth would be high and inflation low. These two combined are rare to find in a volatile world economy. No fund manager can afford to ignore this,” he added.
Besides global sentiment too was positive with equities across Asia-Pacific region closing higher while most European stocks were trading higher on Tuesday.
FPIs’ aggressive buying
For the seventh day in a row FPIs remained net buyers in the cash segment. On Tuesday, they (net) bought shares worth ₹1,956 crore worth shares, taking the last seven days buying to over ₹11,500 crore.
FPI buying ₹85,000 crore from July 21 till today. Close to $11 billion is massive, irrespective of all known negatives, tweeted Kishor Ostwal of CNI Research
Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS, said: “We believe that, to an extent, the expectation of inflation peaking is right, but one will have to keep an eye on energy prices in Europe and the US with the onset of winter, which can re-ignite the inflation fire.”
Banking and financial sector led the rally on Tuesday, as these stocks regained the focus of FPIs. According to the latest NSDLdata, FPIs have pumped in a net investment of ₹1,014 crore in the ‘Financial Services’ sector in July, followed by ₹12,799 crore in August
Bajaj Finserv sizzles
Among the Sensex shares, Bajaj Finserve was the top gainer, advancing 4.1 per cent ahead of the record date for a stock split and bonus issue of shares. IndusInd Bank, Bharti Airtel, Titan, Bajaj Finance HDFC Bank and HDFC were the main gainers.
“The current momentum in the equity markets can sustain, but we would advise investors to raise some cash at the current levels, which can be deployed if the markets correct on either rate hikes or energy prices moving up again,” said Kulkarni.
Mid-, small-caps see profit booking
Broader markets underperformed benchmark indices, as profit booking set in the second half of the day. While the BSE MidCap advanced 0.32 per cent to 26,252.08, BSE SmallCap gained 0.24 per cent to 29,893.97.
Among the sectoral indices, BSE Finance went up 0.85 per cent followed by FMCG rose 0.77 per cent, BSE Industrials and BSE Metals gained 0.74 per cent each, Capital Goods 0.69 per cent and Consumer Durables increased by 0.66 per cent. However, Energy, Oil & Gas and Realty indices closed in the red.