Foreign portfolio investors are funnelling money into the Indian stock markets once again.
The FPIs have been selling stocks for the past two months. But the tide appears to have turned after the US reported a benign inflation rate of 3.2 per cent in October, stirring talk that the Federal Reserve will continue to pause on interest rates with some optimistic analysts starting to speculate about a possible cut in the federal funds rate early next year from the current band of 5.25-5.50 per cent — a 22-year high.
On Wednesday, the 30-share Sensex — the market’s bellwether index — surged 682.44 points to a day’s high of 66358.37 before cooling at the close to 65982.48, an overnight gain of 306.55 points or 0.47 per cent. On the NSE, the Nifty gained 89.75 points or 0.46 per cent at 19765.20.
During September and October, the FPIs cumulatively sold stocks worth Rs 39,300 crore. However, so far in November, the net inflow stands at Rs 108 crore.
The market pundits are waiting to see whether this bullish fervour sustain and whether the cash will keep flowing into the local bourses.
“Although key indices pared gains towards the closing hour, markets continued their upward bias due to an upsurge in IT and realty stocks. Moderating inflation in the US could be signalling that the Federal Reserve may be done with rate hikes, which is good for global markets.
“Further, domestic economic numbers like exports have shown signs of recovery, which has also boosted market sentiment and has triggered a renewed buying interest in recent sessions,” said Prashanth Tapse, senior VP research at Mehta Equities.
IT stocks led the gains on expectations of a better performance in the months ahead. Tata Consultancy Services led the list of Sensex gainers as it advanced by 2.90 per cent, followed by HCL Technologies, Tech Mahindra, and Infosys.
NTPC, M&M and the Bajaj twins — Bajaj Finance and Bajaj Finserv — also recorded smart gains. However, Axis Bank, Power Grid, ITC and ICICI Bank were the major laggards as they lost up to 1.51 per cent. Tata Motors also hogged the limelight as the stock surged to a 52-week high of Rs 685.25 after the credit rating upgrade by S&P.
Meanwhile, Tata Technologies announced a price band of Rs 475-500 per share for its IPO that will open for subscription on November 22.