Fund inflows prop up Indian equities
MUMBAI — Despite dismal corporate earnings and disappointing macro-economic data, the Indian equities markets continued their bull run for the fourth consecutive week supported by a rally in financial sector stocks and a massive influx of foreign funds.
The key indices closed with gains of close to half a per cent each, and surged to new five-month closing highs on the last day of the justconcluded trade week.
The barometer 30-scrip Sensitive Index (Sensex) of the BSE gained 143.5 points or 0.47 per cent to close at 28,468.75 points. Similarly, the wider 51-scrip Nifty of the National Stock Exchange (NSE) rose by 28.15 points or 0.32 per cent to 8,821.70 points.
“After volatile movement in the first four days of the week, the domestic market stood firm driven by increased foreign capital inflows. Both mid-cap and smallcap stocks witnessed buying,” D.K. Aggarwal, chairman and managing director, SMC Investments and Advisors, said.
Market observers pointed out that the banking and financial stocks remained in focus during the week following key announcements such as the Union Cabinet’s approval for merger of State Bank of India’s (SBI) associate banks into SBI, and the Reserve Bank of India (RBI) removing restrictions placed on purchase of HDFC Bank shares by foreign portfolio investors.
“The bank Nifty rose to its alltime-high after the RBI lifted the ban on purchase of HDFC Bank stocks by foreign institutional investors. The bank Nifty and HDFC Bank reversed almost all gains on the same day as the RBI again put HDFC Bank on ban list for buying by FIIs,” Rakesh Tarway, head of research, Reliance Securities, said.
According to the RBI, the holdings of foreign investors in the private-sector bank had fallen below the threshold limit prescribed under the foreign direct investment policy. In a reaction, foreign investors bought the stock up till the permissible limit.
Provisional figures from the stock exchanges showed that foreign institutional investors purchased stocks worth ₹83.53 billion during the week, while domestic institutional investors divested scrips worth ₹47.11 billion.