 "Nifty tops 7,900 as heavy FII buying drives markets")
During the week, the BSE Sensex gained 316 points, or 1.2 per cent, to end at 26,419, while the Nifty advanced 122 points, or 1.6 per cent, to 7,913. In intra-day trades, both indices scaled fresh highs—26,531 and 7,929, respectively.
In his maiden Independence Day speech as prime minister, Modi said he would turn India into a manufacturing and export powerhouse. He also promised employment generation and invited foreign entities to invest in the country.
In July, WPI inflation eased to a five-month low of 5.19 per cent, primarily due to moderation in fuel costs, government data showed. Speculation of an upward revision of India’s sovereign rating outlook by global rating agency S&P, positive global cues and falling crude oil prices also contributed to the market rally. Banking on hopes of a revival in growth, foreign investors have pumped in $12.2 billion in Indian equities so far this year.
The broader markets, which encompass the mid- and small-cap indices, surged through the week, with buying interest across sectors. The mid-cap index rose four per cent, while the small-cap index gained 1.2 per cent.
Dipen Shah, head (private client group research), Kotak Securities, feels speculation on interest rate movements in the US and fiscal reforms in India will continue to drive the markets in the medium-to-long term. In the short term, geopolitical issues and the monsoon will be key triggers, he says.
With gains of 0.5 per cent, the rupee rose for the third consecutive week.
Defensives were laggards, with the fast-moving consumer goods index down 1.3 per cent, the only sectoral index to end in the red. Indices leading the gains were consumer durables, health care, banking, auto and capital goods, with 4-5.6 per cent increases.
The Bank Nifty ended at a record high of 15,819. Public sector banks were among the top gainers during the week, following Finance Minister Arun Jaitley saying the government was working towards bringing in more professionalism in the functioning of these banks and improving their risk management mechanisms. This came amid recent scams in a few public sector banks. Canara Bank, Bank of India, Bank of Baroda, Punjab National Bank and State Bank of India (SBI) rose five-eight per cent each. Among the Sensex 30, Cipla (up 11 per cent), BHEL, SBI, Axis Bank, Baja Auto, Tata Motors, Sun Pharma and Mahindra & Mahindra were the star performers, rising five-seven per cent each.
HDFC, ITC, Tata Consultancy Services and HUL, down one-seven per cent each, were the notable losers. Tata Steel, Reliance Industries, Bharti Airtel and Infosys also recorded losses.
Week ahead
Going forward, the markets are likely to be jittery due to Federal Reserve chairperson Janet Yellen saying policymakers eyeing interest rate increases should move cautiously. The futures & options August derivates expiry on August 28 might see the market turn choppy, as traders roll over their positions.
It is expected data on growth in gross domestic product for the June will be announced on August 29. The markets will also track the dollar-rupee equation in light of the softening crude oil prices.