BSE Sensex closed at fresh 2 1/2 year highs. Most domestic players are said to have missed out on the rally as they remain worried about the weak macro-environment. Industrial output remains sluggish, RBI‘s interest rate cuts have not yet translated into lower rates for borrowers, and India‘s current account deficit continues to be precarious.
Indices continued their upward crawl Friday, but it is clear that the market needs a bigger dose of liquidity to be able deliver meaningful returns hereon. Capital goods, power and realty shares were in demand, while investors shunned those from the pharma, oil & gas and metal sectors.
The 30-share Sensex closed at 20286.12, up 38.79 points over the previous close after touching a fresh 30-month high of 20328 intra-day.
The 50-share Nifty gained 17.40 points to close at 6187.30 .
BHEL, Jaiprakash Associates, DLF, Reliance Infra, and NTPC were among the key gainers in the Nifty, gaining between 2-4 percent.
Bharti Airtel, Dr Reddy’s and Sterlite were among the laggards, down between 1-2 percent.
ITC shares closed slightly down, though the company's fourth quarter numbers were better than analyst estimates.
"It is all about liquidity. Until that party stops, we will just have to keep with the momentum. We know that we will stop at some stage," cautioned Andrew Holland of Ambit Capital, in an interview with CNBC-TV18 today.
Over the last one month, foreign funds have net bought more than Rs 17,000 crore as the India joined the party in emerging markets.
Most domestic players are said to have missed out on the rally as they remain worried about the weak macro-environment.
Industrial output remains sluggish, RBI’s interest rate cuts have not yet translated into lower rates for borrowers, and India’s current account deficit continues to be precarious.
"While we continue to like the long-term outlook for this market, we have kept a somewhat defensive cautious stance on India," Nidhi Mahurkar of Pictet Asset Management said in an interview to CNBC-TV18.
"We certainly need more from the government in terms of administrative reforms. We need to see progress on reform agenda be it on subsidies, infrastructure, insurance and pension, food security," she said.
Buyers continued to chase midcaps, betting that returns in these stocks would be higher, compared to their large cap counterparts.
Alstom India, Crompton Greaves, Alstom T&D, Schneider Electric, and Voltas were the key gainers in the midcap space, gaining between 7-14 percent.
Indian rupee closed at 54.88 to the dollar compared to 54.77 on Thursday.
Foreign Institutional Investors bought shares worth USD 226.49 million in equities on May 16.