Markets may extend rally this month
After infusing money for two months, foreign portfolio investors (FPIs) turned net sellers in April, dumping Indian equities worth ₹8,671 crore on concerns over a tweak in India’s tax treaty with Mauritius and a sustained rise in US bond yields.
This came after a net investments of ₹35,098 crore in March and ₹1,539 crore in February, data showed. The total inflow for 2024 so far is ₹2,222 crore in equities and ₹44,908 crore in the debt market.
Kislay Upadhyay, smallcase manager and founder of Fidelfolio, said the outflow was due to adjustments after heavy inf-lows in March, a short-term gain prospect in longer duration bond in anticipation of a rate cut and ‘wait and watch’ mode of investors till the announcement of election results.
While the tweak in India’s tax treaty with Mauritius on investments made in India via the island nation still bothers foreign investors, weak cues from global markets with unce-rtain macro and interest rate outlook didn’t augur well for emerging market equities, said Himanshu Srivastava, associate director, manager research, Morningstar Investment Research India, said.
Markets may continue their winning run in May after registering gains in the past three months as investors’ sentiment are upbeat amid India’s promising growth prospects, the current government’s potential re-election in the ongoing polls and robust participation from domestic investors, analysts said.
The 30-share BSE Sensex had declined 0.67% in the month of January this year.
However, markets charted a strong recovery path from February onwards.
In February, the BSE benchmark climbed 1.04%, while it jumped 1.58% in March. In
April, the bellwether index advanced 1.12%.
“Overall, the markets are anticipated to maintain their upward trend, backed by robust inflows and participation from both domestic institutions and individual investors.
“Going forward, if the corporate earnings of the remaining companies display a positive sentiment then the markets are likely to continue their bullish sentiment,” Arvinder Singh Nanda, senior vice-president of Master Capital Service Ltd, said.
“Positive market sentiment is anticipated to persist if the Middle East tensions lessen, earnings remain steady, and the Chinese economy continues to move towards resurgence,” Nanda added.“Markets have surged to record highs due to various factors. Firstly, the positive market sentiment, driven by strong prospects for the Indian economy, has bolstered investors’ confidence.
“Expectations of imminent rate cuts have further encouraged investors to buy Indian stocks despite recent corrections. We forecast the Nifty 50 to maintain a positive bias, considering historical trends of rallies during general election years and projecting a gradual ascent,” Suman Bannerjee, CIO of hedge fund Hedonova,
The BSE Sensex hit its all-time peak on 9 April. The index also breached the 75,000 mark the same day
said.
The BSE Sensex hit its alltime peak of 75,124.28 on 9 April this year. The index breached the historic 75,000 mark for the first time on the same day.