Foreign institutional investors, Modi fever boost markets to record highs

MUMBAI, Mar 8 (Business Standard): Markets surged to end at record closing highs in the week to March 7 amid aggressive buying by foreign institutional investors (FIIs) in battered domestic sectors on the back of improving macro economic data, prospects of BJP-led government coming to power and the stability in the Indian rupee.
The 30-share Sensex surged 800 points or 3.8 per cent to end at 21,920 and the broader 50-share Nifty zoomed 250 points or 4 per cent to end at 6,527.
Market volatility was also on the upswing with India VIX zooming 15.5 per cent to 16.72 on Friday, indicating that traders were buying options as hedge against any possible correction.
However, the broader indices underperformed the benchmarks as focus shifted to large-caps and index-based stocks. The BSE Mid-cap index ended up 3 per cent at 6,693 and the BSE Small-cap index closed 2.6 per cent higher at 6,612.
Foreign Institutional Investors have remained net buyers in equities for the past 17 straight trading sessions. During this period, they have bought Indian equities worth Rs 95 billion. On last Thursday, they were net buyers to the tune of Rs 12.73 billion and on Friday net purchases stood at Rs 25.77 billion.
The Lok Sabha elections will be held between April 7 to May 12, 2014 and counting of votes will take place on May 16, the Election Commission said.
The Bharatiya Janata Party-led National Democratic Alliance is likely to win between 212 and 232 seats and United Progressive Alliance 119-139 seats in the Lok Sabha elections, a poll survey has claimed.
The CNN-IBN-Lokniti-CSDS national election tracker projected that the BJP on its own is likely to secure between 193 and 213 seats and the Congress will end up with 94-110 seats.
India's current account deficit (CAD) for the quarter ended December stood at $4.2 billion, or 0.9 per cent of the gross domestic product (GDP), a sharp fall from $31.9 billion (6.5 per cent) in the year-ago period. The fall resulted from a pick-up in exports and moderation in imports, especially of gold.
On the global front, the European Central Bank and Bank of England kept their key policy rates unchanged. However, Russia's central bank hiked its key policy rate by 150 basis points to 7 per cent from 5.5 per cent effective from March 3 after the rouble plunged against the US dollar.
The rally during the week was led by rate sensitive sectors except for Auto which ended marginally higher. Foreign funds which had cut exposure to infrastructure and real estate sectors seem to be on a bargain hunt with most of them available at attractive valuations.
The BSE Realty index was the top gainer among the sectoral indices to end 13 per cent higher followed by Bankex, Capital Goods, Metal, Oil and Gas indices which ended up 8-10 per cent each.
The improving macro-economic data boosted sentiment for banks which are a proxy to the economy. ICICI Bank was the top gainer up 15 per cent followed by Axis Bank, SBI and HDFC Bank which ended up 6.6-11 per cent each.
In the infrastructure segment, Larsen & Toubro ended up 8 per cent while BHEL ended nearly 10 per cent higher.
Metal shares also witnessed value buying at lower levels with Hindalco emerging as the top Sensex gainer up nearly 19 per cent followed by Tata Steel, Sesa Sterlite.
Reliance Industries which had remained range bound in the previous weeks also witnessed buying activity with the stock rising nearly 9 per cent to Rs 869 in the week under review.