Benchmark indices ended positive for the fourth week in a row, with benchmark indices gaining 8% in the last one month driven by strong foreign inflows amid positive earnings, economic data and global cues.
Sensex ended the week higher by 0.64% (178.03 points) to end at a record 28,046.66. Nifty ended higher by 0.64% (52.9 points) at 8,389.9. The 50-share gauge touched its crucial psychological mark of 8,400 mid-week.
Nineteen of 28 Sensex companies that have posted results so far have beaten or matched estimates, Bloomberg data showed.
The week saw broader markets outperform the benchmark indices for the fourth consecutive session given comfort over valuations and consistent foreign fund inflows. The BSE Mid-cap advanced 1.6% during the course of week at 10,154.81 and surpass its all-time high of early 2008. The small-cap index rose nearly 1% from the previous week at 11,217.39 and is about 2100 points away from its 2008 peak.
“Consensus earnings estimates have increased over the past month. Sensex FY15 consensus earnings estimates have increased by 0.7% over the past month, which, combined with a 6.13% increase in the index in the past month, raise the earnings multiple to 15.64x compared with 15.16x a month before, a 4.9% premium to its five-year average,” stated Prabhat Awasthi, MD & head – equity research, Nomura Financial Advisory Services in an investor note.
Overseas funds remained net buyers of Indian equities for the eleventh consecutive session on Friday. Foreign portfolio investors (FPIs) purchased shares worth nearly $105 million in the cash segment on Friday, according to provisional data from the stock exchanges.
Foreign funds, which have been driving Indian markets for over a decade, have now purchased a little over $2 billion in the last eleven sessions and more than $15.3 billion in the current calendar year – the most among eight Asian markets tracked by Bloomberg and the fourth-highest inflows by foreign funds into Indian markets.
FPIs had bought a record $29.5 billion in 2010, followed by $24.5 billion in 2012 and $19.75 billion last year. The purchases have helped the Sensex climb 32.5% so far this calendar year, the best performance among the world’s 40 biggest markets. Sensex returns over a three-year period stand close to 81%
Shares of banks, fast moving consumer goods (FMCG), real estate, and automobile companies were in focus this week. The BSE Capital Goods index was the top performer with 2.95% gains. The BSE Auto index advanced 1.75% from the previous week while the Bank Nifty rose 1.3%.
Shares of energy, power, capital goods, consumer durables and healthcare companies settled on the losing side. BSE Oil & Gas index (-1.95%) was the worst performing sector in the week after brokerage downgrades and the government’s decision to hike excise duty.
Bajaj Auto was the top performer in the week with 4.28% gains, followed by ITC (3.53%), Coal India (3.42%), HDFC Bank (3.37%), and home-loan company HDFC (2.27%). On the other hand, Cipla lost 6.42% in stock value followed by ONGC (-3.89%) and Tata Power (-2.68%).
Analysts are betting on banks and rate sensitives on hopes that the RBI will cut interest rates in its bi-monthly policy on December 2 after WPI inflation rose at its slowest pace since September 2009. CPI inflation slowed to 5.52% in October, the least since the index was created in 2012, while industrial output rose at the fastest pace in three months, reports showed on November 12.
“I will be disappointed if the RBI doesn’t cut rates in December as data supports such a move,” Nirmal Jain, chairman of IIFL, said in a television interview on Friday.