News Column

Sensex up; sentiment high on expected reforms

August 17, 2014

Healthy buying by foreign investors on the back of expected further reforms led to the Indian equities market making gains in the week ended August 14.

"Markets rose by more than 0.5 per cent on Thursday and by more than three per cent for the week on the back of expectations of further reforms from the government and reduced concerns on the geopolitical situation across the world," said Dipen Shah, head of private client group research at Kotak Securities.

The benchmark index gained 0.75 per cent in the week ended August 14 from its previous weekly close on August 9. The index closed at 25,519.24 points, while it ended trade at 25,329.14 points on August 9.

The Indian markets, which remained closed for trading on Friday for Independence Day, saw healthy buying from foreign institutional investors on Thursday.

FIIs had turned net buyers on Thursday to the tune of $206.79 million, or Rs1,266.54 crore.

Domestic institutional investors, including banks, development finance institutions, insurance and mutual funds, bought net stocks worth Rs135.75 crore on Thursday.

"Over the medium to long term, we expect incremental reform initiatives from the government to drive markets. Geopolitical issues on the global front and progress of monsoons can be the near-term triggers," Shah added.

Meanwhile, expectations of a rate cut by the central bank in the next monetary policy review received a setback as the country's retail inflation rose to a two-month high, amid slower growth in factory output.

However, another market analyst said that given the reform buzz and positive sentiment shown by FIIs in investing in India might result in a long-term gain secnario for the markets.

"The most important thing is that the reforms buzz be implemented on the ground. We are comfortable with the markets move in the long term. There might be certain volatility in the short-term but the over all macro-economic indications show a positive outcome in the long term with India reaching a high growth rate in the next six months-one years time," Devendra Nevgi, chief executive of research firm Zyfin Advisors, told IANS.

Week-wise, the S&P BSE sensitive index closed Monday trade 190.10 points or 0.75 per cent up at 25,519.24 points.

The markets had closed at 361.53 points or 1.42 per cent higher in Tuesday's trade even as information technology and technology, entertainment and media stocks fell.

This was the biggest daily gain since June 6, as almost all the sectors ended in the green. The market closed at 25,880.77 points.

The markets closed flat on Wednesday only 38 points or 0.15 per cent up even as capital goods, consumer durables and bank stocks fell. It closed at 25,918.95 points.

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Source: Khaleej Times (United Arab Emirates)

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