FII flow continues to push markets to record highs

The BSE benchmark Sensex rose over 150 points in early trade led by gains in banking and auto stocks amid positive cues from other Asian markets.

The Bombay Stock Exchange’s (BSE’s) 30-share Sensex continued to witness the bull, as it touched a record intra-day high on Wednesday’s trade, on the back of record foreign fund flow.

The BSE Sensex, which had breached the 39,000 mark on Monday, opened 110.4 points higher at 39,167.05 and went up to intraday high of 39,266.85. 

On the other hand, broader index 50-share NSE Nifty, opened at 11,735.30, before touching its intra-day high of 11,761 led by buying interest in bank shares. At the time of filing this copy, Nifty was trading at 11,752, up 39 points (0.33%).

The market breadth was also positive, with 1,209 advances on BSE, against 738 declines.

Since February 19, the markets have been on a surge, as foreign funds have started flocking into the Indian markets, after indications of a slowdown in the western economies. In past 28 trading sessions, BSE Sensex has surged by 3,704 points (10.5%) – a rally last seen in 2007, when it had raced from 10,000-mark to 20,000-mark.

In the month of March, foreign institutional investors (FIIs) parked in highest amount in past two years -- worth Rs 48,751 crore, according to the data compiled by the NSDL.

Till now in April, according to the provisional data available with BSE, the foreign funds have pumped in Rs 1,442.15 crore into the debt and equity instruments of the Indian markets.

The surge in the markets is solely on the back of FIIs flocking into the Indian markets, as domestic investors have been net sellers in the Indian markets since past couple of months. In March, DIIs withdrew a net of Rs 13,930.25 crore from Indian markets, while, till now in April, they have withdrawn a net of Rs 1,470.51 crore from the markets.

Indian markets have played a catch up with the global peers after 4-5 months of underperformance as global liquidity found its way to emerging markets after global central banks turned accommodative and dovish in their monetary policies.

“If you see there are clear indications of a slowdown in the western economy. Fed has also indicated that it might even go for a rate cut in future to boost the economy. That is something which is not good for both debt and equity there. So we are seeing this bull solely because of FIIs flowing into the Indian markets,” said Madan Sabnavis, Chief Economist, Care Ratings.

Despite the flow of foreign funds, the rupee has been on flatter side trading in the range of 68.5-69.5, as global brent crude prices have been moving northward, as crisis in Venezuela deepens.

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