Markets remain bullish on value buying, foreign funds inflow

Mumbai: Indian equity markets remained bullish, witnessing a good rally during the abbreviated trading week ended Friday, prompted by a healthy inflow of foreign funds and value buying by investors.

The key indices maintained their upward trajectory by rising more than half a percentage each, although some gains were capped as investors turned picky on their investments and chose to book profits on the last day of trade.

The 30-scrip sensitive index (Sensex) of the BSE, which had touched a new 17-month closing high on Thursday, ended the week`s trade with an appreciable gain of 265.14 points or 0.93 per cent at 28,797.25 points.

Similarly, the 51-scrip Nifty of the National Stock Exchange (NSE) edged up 57.05 points or 0.65 per cent to close at 8,866.70 points. The Nifty had touched its new 18-month closing high last week.

"Good inflows continued to push benchmark indices to fresh 18-month peaks, with several stocks hitting new 52-week highs," Anand James, Chief Market Strategist at Geojit BNP Paribas Financial Services, told IANS.

"Reduced chances of a September US rate hike also formed a good backdrop, though the ECB (European Central Bank) decision to not extend easing measures kept global vibes under check."

The equity indices started off the trading week on a higher note, with both touching their 52-week highs in almost 18 months.

Dismal US non-farm payroll data released last Friday, which reduced the potential for a September rate-hike, increased the risk-taking appetite of investors.

Besides, positive cues such as value buying at lower levels, substantial inflow of foreign funds, healthy quarterly results and a rise in global crude oil prices aided the equity markets in paring their losses.

"Global stock markets witnessed volatile movements after soft US economic data reinforced concerns over the recovery in the world`s largest economy," said D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors.

"On the domestic market front, active participation of the market participants, healthy quarterly results, inflow of foreign funds and a rise in global crude oil prices supported the domestic market in the week gone by."

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, the equity markets traded with volatile sentiments during the week mainly due to profit booking at higher levels by traders.

"Investors got some peace of mind from Chief Economic Advisor Arvind Subramanian`s statement that India has the potential to sustain 8-10 per cent GDP (gross domestic product) growth during the next two to three years, despite April-June GDP growth coming in below expectations at 7.1 per cent," Desai said.

"Some support also came with an International Monetary Fund (IMF) report saying that India has recently taken important steps towards a national goods and services tax which, when fully implemented, promises to boost tax buoyancy and growth, including by enhancing the efficiency of the internal goods and services market."

Moreover, on the macro front, the Nikkei India Manufacturing Purchasing Managers` Index (PMI) showed a sharp improvement in the health of the manufacturing sector in August, climbing to a 13-month high of 52.6, from July`s 51.8, adding to the positive momentum of the key indices.

However, disappointment over the ECB decision against extending the current bond buying programme led the global and domestic investors to book profits.

Besides, caution ahead of the release of major macro-economic data next week weighed heavy on the indices.

The factory output data -- Index of Industrial Production (IIP) -- for July and inflation figures for August are scheduled to be released on Monday.

"Traders took some encouragement with the report that the growth in India`s service industry accelerated to its fastest pace in more than 3-1/2 years in August, driven by a surge in domestic and foreign demand," Desai added.

"However, there was some concern too with the report that the country-wide monsoon deficit stood at four per cent, with the northeastern and eastern states reporting 13 per cent less rains from June 1 to September 7, 2016."

The Indian rupee showed firm movement during the week to close at 66.68 against a US dollar on Friday.

Provisional figures from the stock exchanges showed that the week witnessed an inflow of Rs 2,088.95 crore.

Figures from the National Securities Depository (NSDL) disclosed that foreign portfolio investors (FPIs) were net sellers of equities worth Rs 6,207.39 crore, or $933.17 million from September 6-9.

Among the individual Sensex stocks, ONGC was the top gainer (up 7.55 per cent at Rs 254.40), followed by Maruti Suzuki (up 6.78 per cent at Rs 5,401), Tata Steel (up 5.54 per cent at Rs 394.50), Tata Motors (up 5.40 per cent at Rs 573) and ICICI Bank (up 5.08 per cent at Rs 274.15).

The losers were led by Tata Consultancy Services (TCS)(down 6.19 per cent at Rs 2,352.50), Coal India (down 1.75 per cent at Rs 332.15), HDFC (down 0.78 per cent at Rs 1,410.85), ITC (down 0.73 per cent at Rs 258.70) and Wipro (down 0.63 per cent at Rs 480.65).