Indices log best week in 17 months

Among the 3,469 stocks traded on the BSE, 1,744 advanced on Friday. In contrast, 1,583 scrips ended the day in the red. The ratio was tilted toward decliners in both May and June.

Indices log best week in 17 months
While the 30-scrip Sensex yielded 4.3% for the week, the broader Nifty50 returned 4.2%. Both gauges clocked their best returns since February 7 last year.

The benchmark indices posted their best returns in 17 months in the week to July 22 as foreign portfolio investors (FPI) started nibbling at stocks and crude oil prices remained south of the $110/ barrel mark. While the 30-scrip Sensex yielded 4.3% for the week, the broader Nifty50 returned 4.2%. Both gauges clocked their best returns since February 7 last year.

On Friday, the Sensex settled 390.28 points or 0.7% higher at 56,072.23 points whereas the broader Nifty50 rose by a similar magnitude, adding 114.20 points to 16,719.45. Nevertheless, the indices are trading about 9.5% lower to the peaks hit in October last year. Brent, which was hovering at $104.50 per barrel, has come off more than 15% from its June 8 peak. With Friday’s gain, indices have extended their rally for the sixth straight session.

While domestic institutions supported the Indian equity for the last year or so, FPIs are back shopping, albeit in small quantities. They had pulled out about $1 billion worth of shares in every week of the last five but bought shares worth $1 billion of local stocks in the first four days this week, putting them on course for the first weekly purchases since April, Bloomberg reported. On Friday, they sold shares worth some $85 million, provisional data on exchanges showed. They sold almost $30 billion worth of shares in the year to July 15.

While tighter monetary policies and aggressive rate hikes by the US Fed have spooked the markets globally, markets seem to be pricing in the rate hikes. Moreover, the correction in the Indian market saw valuations come off to a more reasonable level of 18 times one-year forward estimated earnings.

Barring Dr Reddy’s, NTPC and Sun Pharma, all Sensex constituents gained during the week with IndusInd Bank rallying as much as 15.7%. That was followed by UltraTech Cement and Axis Bank with gains of 11.2% and 10.3%, respectively.

Information technology (IT) stocks, which were bearing the brunt of panic selling, have bounced back smartly during the week. While the Nifty IT index surged 6.4% during the week, the Bank Nifty advanced 5.9%. The gauge for auto stocks surged 2.2% during the last five sessions.

Among the 3,469 stocks traded on the BSE, 1,744 advanced on Friday. In contrast, 1,583 scrips ended the day in the red. The ratio was tilted toward decliners in both May and June.

A return of foreign funds could boost Indian stocks, which have been resilient this year even as their EM peers suffered the worst first-half performance in 24 years amid concerns on US interest rate hikes and China’s pandemic lockdowns. India’s benchmark S&P BSE Sensex Index has climbed almost 8% over the past month, the best performance in Asia.

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