Nifty Set to Scale 9K on Strong Do­mes­tic In­flows

The Economic Times - - Companies: Pursuit Of Profit -

Stock in­dices ex­tended their gains to a fourth straight day on Mon­day, end­ing at an over four­month high on Mon­day ow­ing to a weak­en­ing dol­lar and hopes of a rate cut by the Re­serve Bank of In­dia at its mon­e­tary pol­icy an­nounce­ment on Wed­nes­day. The Nifty crossed the 8,800 mark for the first time since Septem­ber 23 and the BSE Mid­cap in­dex rose 1% aided by con­tin­ued in­flows from do­mes­tic in­sti­tu­tions. .

“In the last one month, the US dol­lar has weak­ened by about 3% and ac­cord­ingly we have seen money go­ing into emerg­ing mar­kets,” said San­jeev Prasad, co-head of Ko­tak In­sti­tu­tional Eq­ui­ties.

The Sen­sex gained nearly 199 points on Mon­day from the previ- ous close at 28439.28 while the Nifty ended 60 points higher at 8,801.05.

Pro­vi­sional data showed do­mes­tic in­sti­tu­tional in­vestors bought shares worth ₹ 449.5 crore on Mon­day. DIIs have pumped in ₹ 6,179 crore into In­dian eq­ui­ties so far this year. After buy­ing for the last few ses­sions, FPIs turned sell­ers again, of­fload­ing shares worth ₹ 403.5 crore. Money man­agers ex­pect the RBI to cut rates by 25 ba­sis points due to eas­ing in­fla­tion and as the gov­ern­ment ad­hered to fis­cal pru­dence in the Union Bud­get.

Led by met­als and banks, mid­caps have seen higher do­mes­tic flows com­ing their way. “For mid­caps, earn­ings for the De­cem­ber quar­ter have been bet­ter than ex­pected. Also, banks have cut lend­ing rates, which will lead to lower in­ter­est cost,” said Sid­dhartha Khemka, head-eq­uity re­search (wealth) at Cen­trum Broking.

Some in the mar­ket ex­pect the Nifty to scale to 9,000 mark in the near term amid strong in­flows from do­mes­tic in­sti­tu­tional in­vestors. With a re­cov­ery of 10.4% from the lows hit after de­mon­eti­sa­tion, the Sen­sex is just 5.5% away from hit­ting its record high of 30,024.74 seen in March 2015, while the Nifty is 3.6% away from its record high of 9,119.20.

The high­est base (in Nifty call op­tions) is at 9,000. The in­dex can go near that level in Fe­bru­ary se­ries,” said Amit Gupta, head of de­riv­a­tives at ICICIdi­rect.

How­ever, oth­ers re­main un­cer­tain. Prasad of Ko­tak Eq­ui­ties said for­eign in­flows that have come in some trad­ing ses­sions re­cently are just pas­sive flows. “If any­thing changes in the terms of ex­pec­ta­tion on US dol­lar or global in­ter­est rates, this money could go back quickly. If the US econ­omy re­cov­ers, the dol­lar will again strengthen,” said Prasad, adding that val­u­a­tions are also ex­pen­sive.

The Sen­sex is trad­ing at a oneyear for­ward price-to-earn­ings ra­tio of 16.2, higher than the MSCI Emerg­ing Mar­ket in­dex which is trad­ing at 11 times. The BSE Mid­Cap in­dex is trad­ing at 17.4 times.


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