Arrival of rains propels Indian equity markets to a new peak

By Porisma P. Gogoi

Mumbai, June 3 (IANS) Disregarding poor GDP numbers, the Indian equity markets cheered the onset of a normal monsoon and rode the bulls to scale a new peak during the week ended Friday.

Market observers opined that the upward trend of the key indices was aided by positive global cues, optimism about the Goods and Services Tax (GST) roll-out, and a stable rupee.

On Friday, the 30-scrip Sensitive Index (Sensex) of the BSE closed at a new high of 31,273.29 points -- up 245.08 points or 0.79 per cent from its previous week's close of 31,028.21 points -- after scaling a record 52-week high of 31,332.56 points intra-day.

The NSE Nifty, too, rose by 58.4 points or 0.60 per cent from its previous close at 9,595.10 points and reached a fresh closing high of 9,653.50 points. It touched a 52-week fresh high of 9,673.50 points.

"Markets climbed higher this week to new life highs after consolidating in a range for a major part of the week. Both the mid-cap and small-cap indices outperformed the Nifty," Deepak Jasani, Head - Retail research, HDFC Securities, told IANS.

"Timely arrival of south-west monsoon and bullish commentary by foreign brokerages on India lifted sentiments."

Market observers pointed out that the key indices touched peaks tracking an upbeat trend in the global markets and gains in the automobile sector that rallied on the back of robust monthly sales data.

"Positive sentiment prevailed in the markets on hopes of good southwest monsoon rains, positive data on US manufacturing and employment, and European factory growth and progress on the implementation of GST," said Vijay Singhania, Director, Trade Smart Online.

"However, India's economy witnessed the slowest growth in the last 16 quarters, as the fourth quarter saw contraction in construction and slowdown in financial services. Meanwhile, foreign investors have brought in more than Rs 9,000 crore in equities during May while their contribution to the debt market is more than Rs 15,000 crore this month," he added.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) invested in a total of equities and debts worth Rs 4,691.05 crore, or $726.51 million, during May 29-June 2.

Provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) sold stocks worth Rs 454.58 crore, while domestic institutional investors (DIIs) purchased scrip worth Rs 111.90 crore during the week.

According to D.K. Aggarwal, Chairman and Managing Director, though the stock markets moved higher, there was a sense of cautiousness amidst disappointing growth numbers and core sector data.

"India's economic growth slowed to 7.1 per cent in 2016-17 and the growth of eight core sectors declined to 2.5 per cent in April. After weak core sectors data, market participants would be eying the IIP (Index of Industrial Production) data for the month of April 2017 and inflation data," Aggarwal asserted.

"A surprise slowdown in Indian growth along with record-low inflation has created room for the central bank to ease interest rates. However, it is expected to keep the repo- rate unchanged in its upcoming meeting scheduled on June 7. Foreign market participants are looking much active after finalisation of GST rates and stable outlook for the rupee," Aggarwal added.

During the week, the Indian rupee closed flat at 64.44 against the US dollar from it's last week's close.

Commenting on sector-specific movement, Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS: "Sugar stocks gained traction after the report that India's 2017/18 sugar production will likely jump a quarter from the previous year to 25 million tonne as decent monsoon rains are forecast."

"Pharma sector, too, witnessed value buying as this sector is trying to catch up with the market's rally. Shares of RCOM (Reliance Communications) witnessed tremendous fall after posting first quarterly loss in eight years and on account of its bulging debt."

Sectors that gained during the week include FMCG, auto and pharma, while losing sectors include metals and IT.

The top weekly Sensex gainers were: Cipla (up 7.54 per cent at Rs 528.65), Hero MotoCorp (up 6.24 per cent at Rs 3,841.75), Dr. Reddy's Lab (up 5.87 per cent at Rs 2,553.30), Mahindra and Mahindra (up 5.79 per cent at Rs 1,418.45) and Lupin (up 4.79 per cent at Rs 1,165.15).

The losers were: Sun Pharma (down 9.45 per cent at Rs 514.80), Tata Steel (down 3.95 per cent at Rs 491.60), Infosys (down 2.69 per cent at Rs 969.45), ICICI Bank (down 1.12 per cent at Rs 318.05), and ONGC (down 1.08 per cent at Rs 173.90).

(Porisma P. Gogoi can be contacted at porisma.g@ians.in)