Spain budget plans take equities to 14-month high

Written by fe Bureau | Mumbai | Updated: Sep 29 2012, 07:57am hrs
Indian equities closed at a 14-month high on Friday as Spains budget plans for 2013 lifted sentiment across Asian markets. The benchmark BSE Sensex, however, ended the week flat with gains of 0.05%.

Its been a spectacular run for the benchmark indices in September, which included a nine-session rally that took the market to a 14-month high. The BSE Sensex has gained 7.6% in the month, the biggest monthly advance since January. The gains can be attributed to the governments reform measures earlier this month as well as the announcements on bond buying and quantitative easing by the ECB and US Federal Reserve, respectively. Foreign brokerages Morgan Stanley, Deutsche Bank and Citigroup raised their targets for the Sensex earlier this month.

On Friday, the broader 50-share NSE Nifty rose 53 points or 0.95% at 5,703, while the BSE Sensex ended the day up 183 points, or 0.99% to close at 18,762, near 15-month high. The overall sentiment remained buoyant on expectations of further initiatives on core reforms, said Dipen Shah, head, private client group research, Kotak Securities. Foreign institutional investors (FIIs) bought shares worth R1,230 crore, while domestic institutional investors sold shares worth R679 crore, provisional BSE data show.

FIIs have bought shares worth about $3.82 billion in September, the highest since February, taking the year-to-date purchases to $16.1 billion. In the year to date, Sensex is up nearly 21%. Market participants expect the FII floodgates to remain open if the reform measures go through. The quantitative easing in the US and Europe may also help whet their risk appetite.

Among its peers, most of the key indices in Asia Pacific ended in the green on Friday. The Shanghai Composite rose the most at 1.45%, while the Nikkei 225 index bucked the trend and declined 0.89%. The optimism that Spains crisis budget for 2013 will help the country manage its debt imbalances boosted sentiments.

All three major European indices were trading in the red on Friday at 5.30 pm IST as Spanish bond yields climbed. The DAX and CAC were trading lower anywhere between 0.35% and 0.60%. The Dow Futures was down 53 points at 13,361, while Brent crude oil prices were ruling higher by $0.77 at $112.78 per barrel.

Back home, 25 of the 30 Sensex stocks advanced on Friday. In the broader market, breadth was strong with 1,644 stocks traded on the BSE ending higher against 1,248 declines. Most of the 13 BSE sectoral indices ended in the green. The consumer durables, FMCG, metal, power and healthcare indices rose more than 1% each. The auto index rose the most at 1.89%. The realty index slipped marginally at 0.37%.