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Low crude oil prices, fund flows fuel equity market’s rise (Market Review)

Dalal Street, NSE, BSEBy Ravi Dutta Mishra and Rohit Vaid,

Mumbai : A slide in global crude oil prices, along with a healthy influx of foreign funds and a strengthened rupee buoyed the Indian equity market indices during the just-concluded week.

In addition, healthy macro-economic inflation and trade data as well as credit rating agency Fitch affirming India’s ‘Long-Term Foreign-Currency Issuer Default Rating’ (IDR) at ‘BBB-‘ with a stable outlook, enhanced the risk-taking appetite of investors.

Consequently, the S&P BSE Sensex gained 298.61 points, or 0.8 per cent, to close at 35,457.16 points.

Similarly, the 50-share Nifty of the National Stock Exchange (NSE) advanced 97 points, or 0.91 per cent, to settle at 10,682.20 points.

“Markets were steady as crude prices continued to drop and led to a consequent decline in bond yields and appreciation in USD…,” Sanjeev Zarbade, Vice President, PCG Research at Kotak Securities, said.

Accordingly, the benchmark Brent crude price which had touched $86 a barrel in early October closed last week’s trade at $67.74.

The fall has key significance for India, which is the third largest importer of crude oil. A steep fall in global prices eases the country’s concerns about inflation and fiscal and current account deficit.

In terms of currency, the rupee on Friday closed at 71.92 per dollar, 3.42 per cent higher from its life-time low of Rs 74.47 to a US dollar which it hit on October 11. Its previous weeks close was at Rs 72.49.

On foreign fund flows, the provisional investment figures from the stock exchanges showed that foreign institutional investors bought scrips worth Rs 3,502.46 crore in the week ended November 16 which was 22 times more than the previous week.

“The ongoing liquidity crunch for NBFCs appears to be fading away as almost all the NBFC’s were able to roll over to meet their commitments coupled with mixed earning season that concluded this week has helped rejuvenate confidence in FIIs…,”
said Rahul Sharma, Senior Research Analyst with Equity99.

The change in trend was further affirmed on Friday after the Associated Chambers of Commerce and Industry of India (Assocham) said it expects foreign institutional investors (FIIs) to “stage a strong comeback” owing to the strengthening rupee, low inflation and weakening oil prices.

“We expect foreign institutional investors to stage a strong comeback into India sooner than later with the rupee improving and getting stable,” Assocham said in a statement.

The rupee and the US dollar equation, along with an uncertain domestic and global economic growth outlook, had triggered a massive foreign fund outflow from the country’s capital markets in October.

However, the domestic institutional investors sold Rs 1,275.61 crore worth of stocks in the past week.

Sector-wise gainers for the week were consumer durables, FMCG and bank indices.
Losers for the week were pharma, auto, IT, realty and metals indices, said Deepak Jasani, Head – Retail Research at HDFC Securities.

The top weekly Sensex gainers were Bharti Airtel, up 9.57 per cent at Rs 327; ICICI Bank up 2.95 per cent at Rs 366.30; Adani Ports up 2.58 per cent at Rs 345.55; Axis Bank up 1.22 per cent at Rs 620.05; and Maruti Suzuki up 0.89 per cent at Rs 7,330 per share.

The major losers were Yes Bank, down 16.68 per cent at Rs 189.85; Sun Pharma down 13.26 per cent at Rs 516.90; Tata Motors (DVR) down 5.81 per cent at Rs 98.90; Power Grid down 2.11 per cent at Rs 187.45; and TCS down 1.93 per cent at Rs 1,873 per share.

(Ravi Dutta Mishra can be reached at ravidutta.m@ians.in and Rohit Vaid at rohit.v@ians.in)

—IANS

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