Stocks close on a high note for Day 5; Factors that fuelled rally

bull bearHigh on confidence, stock benchmarks zoomed by more than 1 per cent on Friday, only to surrender the early gains towards the end.

Banking and IT drove the show, which marked a positive close for the fifth straight session.

It was a flying start by all means and the bulls looked invincible except towards the fag end when there was a bit of a scare. Ultimately, the bulls had the last laugh.

Risk appetite took on shine on unabated foreign capital inflows, a strengthening rupee and positive global shares.

Market at a glance

The 30-share Sensex settled higher 269 points, or 0.71 per cent, at 38,024.32. The 50-share Niftyclimbed 84 points, or 0.74 per cent, to 11,426.85.

Week on week, the BSENSE -0.15 %barometer was up 3.7 per cent and the NSEgauge 3.5 per cent. Both put up their best weekly show since November 30.

Kotak Bank kept a big lead over its nearest peer, surging the most by 4.31 per cent. HDFC Bank and TCS contributed too. ONGC and PowerGrid notched up handsome gains.

In the sectoral landscape, energy, banking, auto and IT pulled all the strings, accounting for much of the upside. Energy proved to be the showstopper, with a gain of 2 per cent.

The worry surfaced as broader markets threw up conflicting signals. While BSE Midcap rose 0.5 per cent, Smallcap took a knock of 0.34 per cent.

What all went into the market’s sizzling show today?

Here are the major factors.

FII inflows: FIIs are pushing the buy button as they double down on India theme. Overseas investors have invested nearly Rs 29,000 crore in Indian stock market year-to-date till March 14. They purchased shares worth Rs 14,400 crore during the first quarter of last year.

PSU banks:
 Credit rating agency ICRA gave a thumbs-up to PSBs. Its latest report stated that public sector banks are likely to report net profit of Rs 23,000-37,000 crore in 2019-20, after four years of consecutive losses. Net profit may be supported by fall in gross non-performing assets (GNPAs).

BSE Bankex was up 1.5 per cent, with Kotak Mahindra Bank, SBI, Federal Bank and Bank of Baroda rallying 2-4 per cent.

Robust export projections: India’s exports are projected to touch an all-time high of $330 billion in 2018-19, braving global challenges such as protectionist measures, Commerce Secretary Anup Wadhawan said Thursday.

“With respect to exports, this year has been particularly good for us. We are likely to touch an all-time record and go past our earlier peak which was in 2013-14 at $314 billion and we hope to reach about $325-330 billion this year,” Wadhawan said.

Positive global cues: Gains in key Asian markets further backed up the market. Hang Seng, Nikkei and Shanhgai advanced up to 1 per cent after a report that more progress has been made in US-China trade talks and UK lawmakers voted to delay a potentially chaotic exit from the European Union.

Other factors: Strengthening rupee and receding geopolitical tensions offered more tailwinds. The rupee was trading 27 paise higher at 69.08 against the dollar in afternoon trade. Going with some equity experts, the market is also looking positive ahead of the 2019 general elections.

Expert View
Sanjeev Zarbade, Vice President- PCG Research, Kotak Securities
“Rally in the markets was led by strong FII buying on account of reduction in geopolitical risks and opinion polls suggested a likely return of the NDA government in general election 2019 were announced.”