Indices rally to end day at 3-month high

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Published: June 20, 2020 1:50 AM

Foreign portfolio investors (FPIs) on Thursday bought stocks worth $48.5 million, according to provisional data on the exchanges whereas domestic institutional investors bought stocks worth $149.75 million

Indian markets had started the week on a decline because of the rising Covid-19 cases and negative global cues but they ended the week with Sensex and Nifty climbing nearly 3%. Indian markets had started the week on a decline because of the rising Covid-19 cases and negative global cues but they ended the week with Sensex and Nifty climbing nearly 3%.

Indian equity markets ended higher this week by 3%, thanks to the rally in the past two trading sessions. The markets closed at their three-month high on Friday.

Positive global cues coming out of European markets ahead of the European Union leaders’ meeting as well as developments on the proposed initial public offering (IPO) of LIC helped the equity markets. Additionally, strong upward movement in heavyweight index stocks such as Reliance Industries (RIL) and Bajaj twins led to the benchmarks ending Friday’s session higher.

The 30-share index Sensex was up by 523.68 points or 1.53% to close at 34,731.73. The broader Nifty50 was up by 152.75 points or 1.51% to close at 10,244.4.

Indian markets had started the week on a decline because of the rising Covid-19 cases and negative global cues but they ended the week with Sensex and Nifty climbing nearly 3%. This is because the focus of the markets has been toward reopening of the economies.

Sanjeev Zarbade, vice-president private client group, Kotak Securities, said, “It has been a good week for the global markets as positive sentiment on reopening the economies overshadowed reports of fresh Covid-19 cases in the US and China. The BSE-30 Index gained 2% plus in the current week. Market mood was supported by a gradual resumption in business activities and an earlier than expected normalisation in certain consumption sectors.”

Foreign portfolio investors (FPIs) on Thursday bought stocks worth $48.5 million, according to provisional data on the exchanges whereas domestic institutional investors bought stocks worth $149.75 million. The total FPI inflow till June 18 stood at $2.5 billion.

Shares of RIL hit an all-time high on Friday to close at Rs 1,763.2 a piece, after the oil-to-telecom conglomerate announced that the record investment deals that it had done in its telecom arm, Jio, and the mega rights issue that the company had conducted, has made the company net debt free well ahead of its March 2021 target. The stock of RIL rose by 6.48% during the day’s trading session and now accounts for over 17% of the market capitalisation (m-cap) of Sensex. The stock touched a full m-cap of Rs 11.15 lakh crore.

Additionally, the government has invited bids for two pre-IPO advisors to help with the IPO of LIC.

Deepak Jasani, head of retail research, HDFC Securities, said, “On the domestic front, the stock markets were also cheering since the government has invited bids to appoint two pre-IPO transaction advisers for the mega proposed IPO of LIC. Reliance moving higher and gaining even higher weight in Nifty also pushed the benchmark indices up.”

“Globally, the markets were in a positive mood, as there were also some reports that China plans to accelerate purchases of American farm goods to comply with the phase one trade deal with the US. This led to some relief on the trade front,” said Deepak Jasani of HDFC Securities.

Sanjeev Zarbade of Kotak Securities said, “After the rally in the current month, investors need to be cautious in the near-term and watch out for geopolitical developments between India and China on one hand and valuations on the other. Resurgence of Covid-19 cases and reports of a second wave of infections are potential risks for the markets.”

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