Short trading week comes to an end with a surprise bang as the Indian stock markets shot up by nearly 2.4 per cent during Friday’s session. Benchmark Sensex surged by 467 points, the most after 648 point rally on September 19, and closed near its three year high at 20,882.89. The broader index, Nifty also shot up by 143.5 points and closed at 6,189.35, above its May 17, 2013 high. This is the highest closing level since 20,932.48 on November 9, 2010. Investors on the exchange were richer by over Rs1.07 lakh crore.
Taking most of the brokers and investors by a surprise, the stock markets recovered sharply after falling nearly 200 points in the starting of the week. Brokers in one voice gave the entire credit of the rally to foreign institutional investors (FII), who have again started to invest heavily in the Indian markets. As per the data provided by Securities Exchnage Board of India’s website, in just the month of October, FIIs have invested Rs6,946.80 crore. Even after the heavy sell-off seen in August and September, FIIs have been net buyers in Indian markets and have bought shares worth Rs80,174.2 crore. On Friday alone, FIIs invested Rs1,752.98 crore, the most in October.
Ashok Agarwal from Escorts Securities said, “I am very surprise as there hasn’t been any major change in the fundamentals of the equity markets. Today’s rally came as a result of heavy buying done by FIIs, who invested across the board in almost all sectors. Investors should not be fooled by this sudden rally. They should continue avoiding short term trading as the market is completely dominated by FIIs, domestic institutions and high networth individuals.”
On the other hand, Equity Trendz’s Kunal Saraogi added that apart from heavy foreign inflows, massive short covering also helped giving strength to the market rally. He said, “lot of FII buying was seen, especially in pharmaceutical, metal and information technology sectors. If the FII buying continues, Indian stock markets could soon make a new all time high.”
Sectorally, all the 13 indices closed with gains lead by bank index which surged by 3.93 per cent. Metal and capital goods indices also jumped by 3.32 per cent and 3.03 per cent respectively. Out of the 30 BSE index components, 29 stocks closed with gains and the same was seen on Nifty. Of the 50 stocks comprising Nifty, 49 shares closed with gains.
While the stocks markets only moved up, rupee saw a choppy trading session. The domestic currency breached the Rs61 per dollar mark making a new high of Rs60.92 but came off from its two-month high and ended four paise lower at Rs61.27 per dollar. Forex experts said that the fresh demand of dollar from importers outweighed capital inflows.
“The strength in the rupee was mainly attributed to weakness in the US dollar and sharp gains in the euro,” said Abhishek Goenka, CEO of India Forex Advisors. He further added that the domestic currency shifted between gains and losses after a news reports that the Reserve Bank of India might close the forex swap window for oil companies, which the RBI later clarified through an official release that the swap window would remain operational and that any tapering of the facility will be done in a calibrated manner.
The dollar index was down 0.06 per cent against a basket of six major global currencies after US lawmakers reached a deal to temporarily avoid a debt default and end a 16-day partial government shutdown.