Indian equities bullish on IMD forecast, indices scale record highs

The Indian equity markets turned bullish on reports that the government`s weather forecaster has predicted healthy monsoon rains and surged to record high levels during the trade week ended on Friday.

The key Indian equity indices zoomed to new closing and 52-week highs, crossing their psychologically significant levels, riding on news reports which quoted a top India Meteorological Department (IMD) official predicting a higher rainfall than previously forecast as the El Nino weather condition had eased.

Substantial inflow of foreign funds and global cues, too, kept investors` sentiments buoyed. However, the markets pared minor gains due to a sell-off led by banking stocks on the last trading day of the week.

On May 11, the wider 51-scrip Nifty of the National Stock Exchange (NSE) recorded a new closing high of 9,422.40 points, and the barometer 30-scrip Sensitive Index (Sensex) of the BSE a new high of 30,250.98 points.

On the same day, the benchmark indices also touched record intra-day highs, as well as new 52-week highs. The Nifty scaled a new high of 9,450.65 points and the BSE Sensex of 30,366.43 points.

In the past week, the S&P BSE Sensex augmented by 329.35 points or 1.10% to close at 30,188.15 points, while the NSE Nifty surged by 115.6 points or 1.24% to wind up the week`s trade at 9,400.90 points. 

"Markets surged higher this week to new life highs on the back of global and domestic cues," Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.

"Sectorally, the top gainers were the auto, metals, realty, telecom, FMCG, IT, healthcare and cement indices. The top losers were PSU (banks) and utilities indices." 

According to D K Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, the Indian stock markets rallied to record highs due to the active participation of domestic market players.

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"The active participation of the DIIs (domestic institutional investors) has balanced any modest selling by foreign players," Aggarwal asserted.

"Moreover, besides healthy corporate earnings, the announcement from the IMD that India looks likely to receive higher monsoon rainfall than previously forecast as concern over the El Nino weather condition eased cheered the market."

Earlier, the IMD had predicted 96% of the annual average of rains.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) invested in equities worth Rs 1,970.2 crore, or $305.15 million, during May 8-12.

Provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) bought stocks worth Rs 2,832.27 crore, while DIIs) divested scrip worth Rs 1,297.49 crore during the week.

Vijay Singhania, Director, Trade Smart Online, explained: "Post a big rally, the market invariably faces a hurdle in the form of resistance at higher levels. This is a normal phenomenon in a bull market, which was very much in play during this week`s trade."

"Last Friday, we witnessed a sell-off led by banking stocks where we saw markets giving away some of the gains. Yes Bank, ICICI Bank and Axis Bank stocks declined sharply on wide divergence between reported NPA (non performing assets) and RBI assessed NPA."

During the week, the Indian rupee strengthened against the US dollar by 7-8 paise to 64.30 from last week`s close of 64.37-38.

The top weekly Sensex gainers were: Bharti Airtel (up 5.88% at Rs 364.90), Hero MotoCorp (up 5.18% at Rs 3,536.95), Bajaj Auto (up 3.84% at Rs 3,001), Sun Pharma (up 3.62% at Rs 653.60) and Adani Ports (up 3.55% at Rs 357.15).

The losers were: Gail (down 2.35% at Rs 408.85), Power Grid (down 1.32% at Rs 206.15), Asian Paints (down 1.21% at Rs 1,132.30), ITC (down 0.9% at Rs 274.30), and Coal India (down 0.99% at Rs 276.20).

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