Strong inflows propel market to all-time high

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Sensex rises 2.57% this month, India-focused funds shine

Strong inflows propel market to all-time high
Riding on a fifth day of consecutive gains, BSE benchmark Sensex tou­ched a fresh all-time closing high on Wednesday, a day ahead of settlement of August futures and options series.

While the 30-pack index hit its all-time closing high of 26,560.15, NSE’s Nifty was just two points short of its lifetime high of 7,938.25 hit on Monday, as institutional money continued to pour into equities.

Sensex has risen 2.57 per cent in August. If the benchmark manages to close even flat on Thursday, this could be the best August for the BSE barometer in the past eight years. In August 2008, it was up 1.45 per cent; in August 2012 it saw a 1.12 per cent rise.

All this has happened as mutual funds, which were reluctant to invest in equities a few months back, are now actively participating buying stocks.

“India overweight is at an all-time high for GEM funds and the consensus bullishness creates the biggest risk to markets, in our view. The good news, however, is that domestic mutual funds (MFs) have also seen positive flows,” pointed out Jyotivardhan Jaipuria, research analyst with Bank of America Merill Lynch, in a note.

Data available with market watchdog Sebi showed domestic institutional investors (DIIs) bought equities worth Rs 4,952.80 crore this month till Monday.

Foreign inflows during the same period stood at Rs 4,233 crore in the secondary market.

On Wednesday, institutional investors (domestic and foreign) bought over Rs 500 crore of equities, provisional figures showed.

Sensex, with 29.66 per cent returns, is the fifth biggest gainer in dollar terms this year among 93 global indices tracked by a Bloomberg index.

BSE’s total market capitalisation, which hit the Rs 75 lakh crore mark in May this year is not too far from the Rs 100 lakh crore mark, as the market value of all listed Bombay Stock Exchange companies stood at Rs 92,53,666 crore on Wednesday.

“A consolidation around 8,000 levels on the Nifty is the general expectation, given 11 per cent run up since election outcome and valuations touching 15 times FY16 earnings but our research team sees significant upside not just in select midcaps but also a number of largecaps,” said Amar Ambani, head of research at IIFL.

On Wednesday, Sensex rose 117.34 points, or 0.44 per cent, to settle at 26,560.15. Nifty advanced 31.30 points, or 0.40 per cent, to 7,936.05.

One of every two stocks that traded for the day on BSE ended higher.

Sensex stock Oil and Natural Gas Corporation (ONGC) rose 2.31 per cent to Rs 427.75. ICICI Bank, GAIL, Tata Motors and Hero MotoCorp advanced 2.05 per cent, 1.73 per cent, 1.70 per cent and 1.61 per cent, respectively.

Losers included Sesa Sterlite, BHEL, NTPC and HDFC Bank which fell 1.67 per cent, 1.29 per cent, 1.17 per cent and 0.70 per cent, respectively. DLF plunged 4.44 per cent to Rs 183.05 after the Supreme Court, hearing the CCI penalty case, passed an interim order asking the developer to deposit Rs 630 crore within the next three months.

BSE midcap and smallcap indices rose 0.73 per cent and 0.79 per cent, respectively.

Devang Mehta, senior vice-president at Anand Rathi Financial Services said that all signs of a structural bull market seem to be in place as market has been showing bit of resilience.

In a note, he pointed out that the negative events are being digested and ignored after a day or two, and that the focus has shifted to sectors which have shown robust earnings growth.


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