Mumbai, Sep 3, 2016: After two weeks of lacklustre trading, the latest one that ended Friday saw some renewed appetite for equities among investors, lifting two key indices to their highest levels in 52 weeks.
The sensitive index (Sensex) of the BSE rose 2.7 per cent at 28,532.11 points, after touching a 52-week, intra-day high of 28,581.58 on Friday, while the Nifty of the National Stock Exchange (NSE) rose 2.78 percent at 8,809.65.
Both the indices also close at 17-month highs.
The main reason for this uptick in sentiments was the flow of some positive macro-economic data from within the country.
The official data on national income showed a 7.1 per cent growth in GDP in the first quarter of this fiscal. While the growth was slower than last year, the fast clip in the expansion of manufacturing sector was a comforting factor.
“Markets regained momentum with report of manufacturing sector growth touching a 13-month high in August, bolstered by expansion in new works as well as acceleration in buying and production levels,” said Dhruv Desai, Director and COO, Tradebulls.
“The Nikkei India Manufacturing PMI (purchase managers’ index) jumped to 52.6 in August from 51.8 in July as Indian manufacturers enjoyed a solid improvement in operating conditions last month. Sustained foreign fund inflows and persistent buying by domestic financial institutions as well as retail investors, supported the markets’ uptrend.”
But the gains, and in some cases loses, were not evenly matched across sectors.
The launch of free lifetime voice service by Reliance Industries, along with a sharp cut in its tariff for data, shook the telecom counter. The BSE telecom index lost maximum ground, of 5.8 per cent. The realty index was also down, albeit at a lower level of 1.73 per cent.
On the other hand, the indices for automobiles, banking and capital goods rose by 5.1 per cent, 3.6 per cent and 2.9 per cent, respectively, data available with the exchange showed.
This was reflected in the prices of individual stocks as well, with Tata Motors, Hero MotoCorp and UltraTech Cement being the man gainers on the BSE, while Idea Cellular, Bharti Airtel and Bharat Heavy Electricals led the losers.
“Passenger vehicle sales registered a scorching growth of 16 per cent for the month of August, which is the loudest signal on the health of the economy. This is one macroeconomic signal which is infallible in estimating the vibrancy in the economy,” said Jimeet Modi, CEO, SAMCO Securities.
Pointing to another key sectoral development, Modi said: “The government has initiated a policy decision to release Infrastructure companies’ 70 per cent of the funds stuck in arbitration awards, wherein the companies have won, but the matters are in appeal. Such a business-friendly move is unprecedented in the history of modern India.”
As regards foreign institutional investors, they were net investors in the Indian equity markets with a figure of nearly Rs 2,175 crore.
Looking ahead, analysts said the foreign funds will be keenly watched, since the markets are around a 52-week high and any signal can trigger sharp reactions.
“Investors will also closely follow important cues in the next two-three weeks like the global markets sentiment, monsoon progress and quarterly earnings season,” said Desai of Tradebulls. “Indian equity markets likely to trade volatility due to profit booking at higher levels in coming sessions.”