Indian equities clocked in their first weekly gain after five weeks of decline,amid rallying global equity markets,while traders turned bullish ahead of the RBIs monetary policy meet on March 19.
The benchmark indices witnessed huge gains,their highest in the last 14 weeks after sliding more than 6% since February. They gained about 4% to end at their highest level in nearly a month. The 30-share Sensex and 50-share Nifty advanced 764.7 points and 247.2 points to 19,683.23 and 5,945.70,respectively.
While IT stocks led the market rally for most of the week,blue chips from all sectors gained in the last two days. TCS and HCL Tech hit their all-time highs during the week,before ending with gains of 5.4% and 6.7%,respectively.
Infosys also rode the momentum and climbed over the R3,000-mark for the first time in 23 months on Thursday before shedding part of the gains and closing the week at R2,970,up 2%. HDFC,Reliance Industries,L&T,HDFC Bank,SBI and ICICI Bank were other top gainers,rising 5-8%.
Global markets climbed during the week after actions from policymakers raised confidence that global central banks will continue with stimulus measures. On Thursday,European Central Bank held rates at a record low,even as Bank of England left its four-year-old bond purchase programme unchanged.
On the other hand,data showed that jobless claims in the US fell,while private employment gained amid a recovery in the ISM service index in February. Following these developments,the Dow Jones Industrial Average rallied to its all-time high of 14,329.49 on Thursday.
According to a Reuters report,European shares,which have rebounded strongly this week after last week\’s Italian election and US spending cuts-related wobble,opened up 0.5%. That put them on track for their biggest gains since the opening week of the year.
In Asian trading,Japan\’s Nikkei hit a 4-1/2 year high and the 0.5,0.6 and 0.5 opening rises by London\’s FTSE 100,Paris\’s CAC-40 and Frankfurt\’s DAX helped MSCI\’s world share index to its highest level since late June 2008.
Back home,FIIs continued to accumulate Indian equities as their net buying during the week equalled about $560 million. Their net purchases for the year have touched $8.97 billion. As per JPMorgan,currently,investors in the EPFR universe are overweight on India by 140 bps against the benchmark,a six-year high.
Deutsche Bank,which maintains a positive stance on India,cited continued selling by domestic institutional investors as one of the key risks to its outlook. In 2013 so far,they have sold $5.3 billion of equities even as the pace of selling has reduced compared to mid-February,shows the five-day moving average of the net-sell value.
Meanwhile,Goldman Sachs on Tuesday increased its 2014 earnings growth estimates for Nifty to 16% from 14%,while maintaining its year-end Nifty target of 7,000. Based on its expectations of a turning macro cycle and a pick-up in the investment cycle,the brokerage house favours stocks related to the investment cycle from capital goods and banking space.
Traders turned optimistic of a 25-bps rate cut by the Central Bank in its next policy meet after the finance minister presented a conservative fiscal deficit target for 2013-14 in his Budget speech. As a result,banking and capital goods stocks got a boost. Oil & gas stocks continued to ride on reform measures.
Volumes in the cash and derivatives segment stayed in line with last months averages. In February,while combined cash market turnover of BSE and NSE fell to a three-month low ,at R13,439,activity in the derivatives segment dropped to a 10-month low of R1.4 lakh crore. India VIX,a gauge of underlying market volatility,declined from 14.01 to 13.34,during the week after inching towards its all-time low of 13.04 on Thursday.