Foreign institutional investors (FIIs), buoyed by quantitative easing (QE3) by the US Federal Reserve and the diesel price increase, on Friday pumped in over half-a-billion dollars in the Indian stock market.
The BSE Sensex rose 443 points – the highest rise in a day this calender year – to close at a 14-month high of 18,464.27. The rupee rose two per cent – the highest amid Asian currencies – to a four-month high of 54.31.
The party isn’t over yet. For many, it’s just starting. The government’s bold steps, such as allowing foreign direct investment in aviation, retail and other sectors has sent sentiments soaring.
“This is the beginning of a significant rally. The sharp rise in the rupee would act as a trigger for FIIs to pump in more money. We expect market to touch 21,000 before March,” said G Chokkalingam, executive director & CIO, Centrum Wealth Management.
Three key decisions – ECB President Mario Draghi’s unlimited bond-buying programme, increase in diesel prices by Rs 5 and a cap on subsidised LPG to a consumer at six cylinders a year by the Indian government and Fed Chairman Ben Bernanke’s $40-billion-a-month bond-buying programme – have seen the Sensex surge six per cent, or 1,118 points, in last seven trading sessions.
Precious metals also surged. Gold and silver were trading at six-month highs of $1,777.95 an oz and $34.67 an oz, respectively, in early London trade on Friday.
India, which has received the highest foreign inflows among the 10 Asian markets outside China that Bloomberg tracks, is likely to attract further flows after QE3.
According to BSE’s provisional figures, FIIs’ net purchase stood at Rs 2,833 crore on Friday, whereas DIIs sold Rs 688-crore shares. FIIs have pumped in as much as Rs 68,874 crore this year.
Friday’s rally added nearly Rs 37,000 crore to investors’ wealth in terms of market capitalisation of all the BSE-listed companies.
| SENTIMENTS SOAR | |||||
| Top 5 gains in 2012 | Commodities | ||||
| Date | Sensex | change* | Sep 14, ‘12 | %chg* | |
| Sep 14 | 18,464.27 | 443.11 | Silver (Rs /kg) | 63,665.00 | 2.13 |
| Jun 29 | 17,429.98 | 439.22 | Standard Gold (Rs /gm) | 32,200.00 | 0.63 |
| Jun 06 | 16,454.30 | 433.66 | |||
| Jan 03 | 15,939.36 | 421.44 | Indian Brent Crude ($/bbl) | 114.43 | 0.01 |
| Mar 09 | 17,503.24 | 357.72 | |||
| Top Sensex performers today | |||||
| Company | Sep 14, ‘12 | % chg* |
Company
| Sep 14, ‘12 | % chg* |
| Jindal Steel | 372.25 | 8.83 | Reliance Ind | 840.95 | 5.35 |
| Hindalco | 118.10 | 8.00 | ICICI Bank | 1,006.35 | 4.97 |
| SBI | 1,970.55 | 5.52 |
*Change over previous close
Data compiled by BS Research Bureau | ||
The rupee’s jump was the highest single session gain in 11 weeks. “The rupee is poised to benefit from a combination of domestic and global developments,” said Hitendra Dave, head of global markets (India) at Hongkong and Shanghai Banking Corporation.
