Unwinding of short positions by foreign institutional investors (FIIs), coupled with aggressive long bets by domestic institutional investors (DIIs) led to a sharp rise in the indices, said one derivatives expert.
Despite valuation concerns being echoed in India's small and midcap space, Mobius said he is still very upbeat on India's as an investment destination.
After two consecutive months of huge selling, foreign institutional investors turned net buyers in the month of June, having bought shares worth $3.2 billion – the second-highest monthly buying after $4.2 billion in March.
In the auto sector, FIIs sold Rs 3,323 crore in the second half of May, up from Rs 706 crore in the first half. In FMCG, they sold Rs 3,015 crore, compared to Rs 1,158 crore earlier. In power, they sold Rs 2,250 crore from Rs 792 crore initially.
The buying spree has picked up in the last three months with March logging Rs 56,356 crore, April Rs 40,720 crore and May (till date) Rs 45,000 crore
FIIs offloaded financial, construction, and FMCG stocks. They were net sellers of financial services shares, pulling out Rs 10,000 crore from the market in February, after Rs 30,000 crore a month back
India's sovereign financing costs are currently less affected by external factors due to strong domestic financing, but this could change if non-resident holdings increase and fiscal metrics weaken, Fitch report said.
Jain says the inclusion is a major win for India, as it attracts a significant pool of global capital for bond allocations, leading to increased foreign exchange inflows
Improving macroeconomic conditions, including a decline in consumer price inflation and a halt in interest rate hikes by the Reserve Bank of India, have boosted investor sentiment
The flow was the highest since February 24, 2021, when FIIs recorded highest ever inflow at Rs 28,739.17 crore. The second largest single day inflow was on April 21, 2015 at Rs 17,488.73 crore.
S Ranganathan of LKP Securities sees the rally as a reversal in sentiment and not just a pullback. He feels the worst of the downtrend from the top - 62,000 in Sensex - is over
Smooth implementation of GST, resolution of banking system stress and revival of investment cycle are the key things investors are looking forward to being addressed.
Nifty, which had rallied close to 500 points in the run-up to the credit policy, is seen trading in a wide range of 5500 to 6000 in May, experts said.
Gautam Trivedi of Religare Capital Markets expects strong flows to continue in the near-term. However, continuous selling by the domestic investors remain a cause for worry, he told CNBC-TV18.
Foreign investors seem to have embraced Indian stocks yet again with net inflows crossing Rs 1.2 lakh crore (USD 23 billion) in 2012 and taking their total cumulative investment in the country's equity market to an all-time high of USD 125 billion.
CNBC-TV18's managing editor Udayan Mukherjee says that the market will hinge more on how global events turn out rather than the GAAR clarification.
According to Lalit Thakkar, managing director of Angel Broking, this is not the right time to sell. In an exclusive interview to CNBC-TV18, Thakkar said that the market has not traded at a 12PE range for the past 7-8 years, barring the 2008 crash. Therefore, everyone should look at cashing in on the opportunity.
The domestic market has been trading range-bound over the past month. Suresh Mahadevan of UBS tells CNBC-TV18 that it is likely to continue this way until the fourth quarter.