On Friday, foreign institutional investors (FIIs) bought $38.74 million worth of equities, while domestic institutional investors (DIIs) sold shares worth $187 million, according to the BSE provisional data. In year to date, FIIs have bought more than $4 billion worth of equities.
It was a tepid week for the markets with the Sensex ending 0.08% higher. Markets ended flat on Tuesday after Reserve Bank of India (RBI) unveiled its monetary policy, which was termed as cautious by analysts. The RBI left the repo rate unchanged. The tone of RBIs commentary was one of caution, emphasising the potential upside pressures on retail inflation. In fact, we think the move of reducing banks LAF repo borrowing limit (at 8%) and to switch the same to term repos (at 8-9%, based on auctions) will result in a marginal tightening in near-term interest rates, Barclays analysts said in a report.
On Thursday, markets ended marginally lower with India's HSBC Services Purchasing Managers' Index (PMI) falling to a 3-month low. The index fell to 47.5 in March from 48.8 in February.
Among its peers, most Asian indices ended in the red on Friday ahead of the US non-farm payroll data. The Nikkei (-0.05%), Hang Seng (-0.24%), Kospi (-0.28%), Straits Times (-0.23%), Jakarta Composite (-0.68%) and Taiwan Taiex (-0.19%) were the major losers. Shanghai Composite ended with gains of 0.74%. Most European indices were trading in the green. CAC (0.32%), DAX (0.48%) and FTSE (0.50%) were the major gainers at 6.15 pm IST.
The US jobs data, which was out later in the day, showed that non-farm payrolls in March increased by another 192,000 after increasing by 197,000 in February
Back home, 25 of the 30 Sensex stocks ended in the red. However, the breadth was strong in the broader market as 1,601 stocks advanced against 1,176 declines. Most of the 12 sectoral indices ended in the red. The BSE Auto (1%), BSE IT (-0.95%), BSE Power (-0.83%) and BSE Oil & Gas (-0.50%) were the major losers.
The NSE cash turnover on Friday stood at Rs 14,302.63, while the turnover in the F&O segment stood at Rs 1.22 lakh crore.
Experts feel the current rally in markets can face resistance as it is not supported by economic growth. The starkest contrast at the moment is the euphoria among equity markets vis--vis Indias more sobering growth-inflation dynamics. Despite a record harvest and strong agricultural growth, GDP growth is still on course to print below 5% for a second successive yearfor the first time in 26 years. Inflation, too, continues to be sticky. Vegetable prices have crashed in the run-up to elections, and headline CPI has gapped down to 8%. But core CPI is still stuck at 8% despite weak growth. And food inflation has averaged 10% over the last 10 years, suggesting that an upward mean reversion of food prices is inevitable, JP Morgan analysts said in a report.