Benchmark indices rise 2% as FIIs return to Indian shores

Sebi data show FIIs turned net buyers of stocks worth $600 mn in last 10 trading sessions

Benchmark stock indices ended 2 per cent higher in the week ended February 28 amid persistent buying by foreign institutional investors (FIIs). The buying spree laid to rest fears that India may have gone off the FII radar because of a liquidity crunch after the US Federal Reserve started tapering its bond-buying programme.

According to data put out by the Securities and Exchange Board of India (Sebi), FIIs turned net buyers of stocks worth over $600 million in the cash segment in the last 10 trading sessions after 13 consecutive sell-off s since late January.

Fed Chairperson Janet Yellen on Thursday said the US central bank would continue to trim its monthly bond purchases with an eye on macroeconomic data. (STREET PERFORMANCE)

Indian markets started the week muted and traded in a narrow range ahead of the expiry of the futures and options (F&O) February series on Wednesday.

The 30-stock Bombay Stock Exchange (BSE) Sensex ended at a five-week high of 21,120, up 419 points or two per cent, and on the National Stock Exchange (NSE) the Nifty was up 122 points, or two per cent at,  6,277.

The broader markets remained upbeat, too, but under-performed the benchmarks with the BSE small- and mid-cap indices rising between 0.8 and 1.2 per cent against the Sensex’s two per cent rise.

The F&O contracts expiry, which typically is the last Thursday of every month, was advanced to Wednesday on account of a market holiday on Thursday.

“The markets witnessed significant volatility in the February series. Every correction got bought into, led by an up-move in the index. Private banks outperformed while the PSU segment consolidated. CNX IT and capital goods did well, while the metals space underperformed. Considering the rollovers to the March series, we expect upsides to be limited. Selling pressure can be expected around the 6,300-6,350 levels. On the downside, strong support is seen at the 6,100 level below which 5,950 can be tested. For the medium term, we remain positive on the market and advice accumulation of select stocks,” said Sahaj Agrawal, deputy vice-president (derivatives research), Kotak Securities.

Movers and shakers
Among sectors, the BSE Capital Goods index was up over five per cent, supported by a 11.4 per cent surge in the heavyweight BHEL stock. Capital goods stocks were the top performers this week on hopes that a recovery in the capex cycle will boost the prospects of the sector.

The BSE healthcare, auto and consumer durables indices rose between 2.8 and 4.5 per cent and emerged as the top gainers from the BSE sectoral indices. In healthcare, Sun Pharma and Cipla added between 4.08 and 4.62 per cent. Bajaj Auto surged 4.5 per cent in the auto space.

The metals and power indices ended with losses; down between 1.25 and 3.4 per cent. Tata Steel slumped almost 8 per cent and emerged as the top Sensex loser this week. The NTPC stock was down 14.7 per cent and Sesa Sterlite fell 4.5 per cent. The outlook for metal stocks remained gloomy on account of China’s growth concerns.

Outlook
Investor sentiment is likely to be hit next week as macroeconomic data released after market hours on Friday showed the economy grew 4.7 per cent in the quarter ended December, slower than the previous quarter’s 4.8 per cent and dashing the government's hope of a recovery from the second half.

Further, the HSBC India Manufacturing PMI data for February will be released on Monday and the HSBC Services Business Activity Index will be released on Wednesday.

Auto stocks will also be in focus after the announcement of their sales numbers for February.