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Benchmark indices rose to 30-month highs on Thursday but ended almost unchanged over the previous day even as shares of banks and property developers extended gains on hopes of a steeper rate cut when the central bank's rate-setting committee meets next month.
Selling in consumer goods and information technology stocks capped upsides in the indices.
The BSE Sensex finished the session at 2,0247, up 0.2% from its previous close, while the Nifty ended at 6169, up 0.4% from its previous close.
Market analysts said that the rally in the banking stocks was predictable with inflation numbers improving and hopes of further rate-cuts by the RBI. But the surprise was the rally in the stocks of the PSU sector banks, they added. SBI was up
“This indicates that investors are now looking purely at valuations. Some of these stocks are not cheap anymore, so investors are looking at those with cheaper valuations. This would help reduce the valuation gap between under-performing stocks and out-performing stocks,” said Gaurav Dua, Head of Research, Sharekhan.
Similarly, some of the major gainers of the day were stocks belonging to the real estate sector like HDIL, IRB, Indiabulls Real Estate among others.
“These stocks are just playing into the momentum. There has been no fundamental improvement in this sector. Trading volumes in these stocks is higher than delivery-based volumes,” said Sadanand Shetty, Vice -President & Senior Fund Manager Equity, Taurus Mutual Fund.
Other stocks which rallied include those which have been added to the MSCI index. Appollo Hopsitals, Glaxo Smithkline Consumers, Oil India and Wockhardt have been added to the MSCI India index. Appollo was the highest gainer on the BSE, up 8.5% from its previous close. Glaxo Smithkline was up 7.6%, Oil India was up 3.1% and Wockhardt gained about 1.06%.
On thursday, FIIs were net buyers and bought shares worth Rs 1070 crore, while DIIs continued selling in the net at Rs 390 crore.
