Sustained foreign fund inflows propel Indian market higher
MUMBAI: Mirroring the bullish sentiment, the stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed at 3,499.50, netting a gain of 44.90 points or 1.30 percent over its previous session's close.
Dealers said that the market opened little changed from its previous session's close and technology shares lost ground in the early trade on profit booking after sharp gains in recent trade.
The market index, however, gained momentum in the second half of the trading session as foreign institutional investors and domestic fund managers rushed to pick up heavyweight old economy counters like Hindustan Lever Ltd.
Foreign funds, which as the backbone for India's liquidity starved capital market, has sharply increased investment into the domestic bourses in the last few days on hopes of a monsoon-led sustained recovery in the days ahead.
The quantity of rainfall in the June-September period is crucial for the farm sector that accounts for nearly a quarter of the gross domestic product and employs 70 percent of the country's over one billion population.
Foreign institutional investors have bought shares worth $360 million in the current month so far, compared to a total investment of $254.8 million for the month of May.
"The market rally is being supported by large-scale buying by foreign institutional investors. They are encouraging domestic investors to pick up equities," said a broker with the Bombay Stock Exchange.
"Although we may see some mid-term technical correction in the days ahead but overall the market mood continues to be very bullish and I expect the positive trend will continue," the broker added.
In the old economy sector, consumer goods giant Hindustan Lever gained 5.5 percent to 171.10 on fresh buying following hopes that good monsoon rains would boost the company's earnings in the current fiscal year.
Reliance Industries, India's largest refiner and petrochemicals maker, rose 3.7 percent to 336.40 on fresh institutional buying interest triggered by company's aggressive expansion plans in the petrochemicals sector.
Tobacco giant ITC gained 1.4 percent to touch 744.50, Dr. Reddy's Laboratories ended two percent higher at 1,057.60 and Ranbaxy Laboratories, India's largest drug maker, closed with a gain of 0.7 percent at 723.25.
In the technology sector, Infosys Technologies, India's largest listed software exporter, rose 0.5 percent to 3,058.40 after recovering from lower levels in the early trade.
HCL Technologies, a New Delhi-based software development and services major, gained 4.1 percent to touch 144.75 and Hyderabad-based Satyam Computer closed with a gain 1.6 percent at 186.75.
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