The sudden plunge in global crude prices and strong cues from Europe and Asia boosted Indian stocks, with the 30-share Sensex of the Bombay Stock Exchange (BSE) rising 513.19 points or 2.89% to end at 18,240 on Friday. In terms of index points, it was the 11th-largest single-day gain. Despite witnessing initial volatility, the Sensex managed to end 2.07% higher during the week, its best performance in the last 12 weeks. The broader S&P CNX Nifty of National Stock Exchange (NSE) closed at 5,471.25 on Friday, gaining 151.25 points or 2.84%.
Mahesh Patil, head (equity ? domestic assets) at Birla Sun Life MF said: ?The surge in markets was thanks mostly to oil coming off higher levels; however, we believe that still there is some uncertainty in global markets.? Historically, oil has had a negative correlation with Indian stock markets. Market experts said that with oil prices falling, macro concerns for equity markets are partially down. Strong cues from Europe with Greece winning the consent of international lenders on Thursday for a five-year austerity plan too gave a further leg-up to domestic markets.
The week started on a negative note with rumours of a possible reversal of the Mauritius tax treaty, which pulled Nifty below the crucial support level of 5,300. However, strong buying by foreign and domestic investors on Friday more than recouped all the losses.
According to provisional figures from the BSE, foreign institutional investors (FIIs) bought stocks worth over R890 crore on Friday, while domestic institutional investors (DIIs) sold stocks worth R487 crore. In June, FIIs have pulled out over $0.29 billion from the Indian markets and $0.53 billion in the current calendar year.
Said Navneet Munot, CIO at SBI Mutual Fund: ?Markets are likely to get some support at current levels and may not witness any major correction from the current levels.? Experts felt that at these levels, the market was reasonably priced. As per Bloomberg estimates, the Sensex is quoting at a one-year forward price-to-earnings multiple of 14.7 times against the long-term average of 15.5.
On Friday, most Asian markets ended the day with gains. China’s Shanghai SE Composite added 21.6%, while Hong Kong’s Hang Seng Composite gained 2.07% and South Korea’s Kospi surged 1.7%. Barring consumer durables, all the sectoral indices ended the day on positive note, with realty, metal and IT leading the gains.
NSE?s derivatives segment reported a turnover of over R1.97 lakh crore, surging 73% compared to the previous session, while the average daily turnover in the last six months stood at approximately 1.27 lakh crore. Turnover in NSE’s cash segment was over R12,300 crore, up 38% over Thursday’s volumes. The average daily turnover in the last six months was at over R11,800 crore.