Business
RBI, Moody's lifted mood for Indian equities
By
By Rohit VaidMumbai, April 11
The positive sentiment on
India triggered by global ratings agency Moody's and the central bank's
dovish language on the economy's prospects buoyed the markets for the
second week, lifting a key index by 2.2 percent in the trade ended
Friday.
Analysts expect the bull run to continue next week as
well, beginning Monday, with the markets likely to respond positively
to fresh official data on India's factory output that indicated the
steepest growth yet in nine months at 5 percent.
The data had come after the closing bell Friday.
"The
markets are expected to be in the positive territory due to the slew of
data, ratings and guidance which show continued growth in the Indian
economy," said Dipen Shah, head of private client group research, Kotak
Securities.
"The rally of over 600 points last week was due to
the relief on the US Fed front, the expectations of further rate cut by
the central bank and government's fast pace on the reforms front," Shah
told IANS.
Moody's revised India's sovereign ratings outlook to
"positive" from "stable." Another ratings agency - Fitch - also
reaffirmed its stable outlook on India.
The think-tank of the
rich nations, the Organisation for Economic Cooperation and Development
(OECD), also endorsed India's economic expansion projections.
India's
factory output also mirrored the positive sentiment by showing an
expansion of 5 percent in February over a 2.6 percent rise in January.
According
to Devendra Nevgi, chief executive of ZyFin Advisors, the RBI's
language in its outlook has strongly signalled future rate cuts
depending on the bank's ability to pass on the benefits to consumer.
"The
markets were pleased by a dovish language used by the RBI. On ther
other hand the RBI has also clearly stated that any further rate cuts
will depend on the economic data, and the bank's ability to pass on the
previous interest rate benefit to consumers," Nevgi told IANS.
"The
gains during the previous week were made after the markets factored in
that the fourth quarter results will be subdued. Low crude oil and
current data on inflation also buoyed the markets," he added.
However,
Gaurang Shah, vice president of Geojit BNP Paribas, cautioned: "Our
sense is that from now on one can expect some consolidation in the
market keeping in mind the Q4 earnings season which will kick off very
soon and the markets will take directional call from thereon depending
on which sectors do well and don’t in terms of earnings visibility."
Analysts
pointed out that apart from the healthy industrial output figures for
February, the expectations from the season's earnings and the March CPI
(consumer price index) data to be released on Monday will also be the
key triggers for the coming week.
The CPI-based inflation rose to 5.37 percent for February, from 5.19 percent in January and 4.28 percent in December 2014.
The
benchmark, 30-scrip S&P Sensitive Index (Sensex) of the Bombay
Stock Exchange (BSE) gained 619 points or 2.19 percent during the weekly
ended April 10 to end at 28,879.38 points, against the previous week's
close 28,879.38 points.
Most sector indices of the BSE closed
positive with realty, FMCG (fast moving consumer goods) and metals
gaining more than 5 percent each.
During the week before, the barometer index rose 801.55 points, or 2.91 percent.
Similarly, at the National Stock Exchange (NSE), the broader, 50-share CNX Nifty made gains of 2.26 percent or 194.1 points.
The Sensex had ended the truncated weekly trade ended April 1 at 28,260.14 points, from a close of 27,458.64 points on March 27.
On
Friday, the Sensex opened at 28,889.27 points and ended the day's trade
at 28,879.38 points, down 5.83 points or 0.02 percent from the previous
day's close at 28,885.21 points.
The major Sensex gainers on
Friday were: Sesa Sterlite, up 3.65 percent at Rs.201.70; State Bank of
India (SBI), up 1.85 percent at Rs.285.65; Dr.Reddy's Lab, up 1.62
percent at Rs.3,800.15; Bharti Airtel, up 1.12 percent at Rs.411.35; and
Infosys, up 0.99 percent at Rs.2,233.30.
The losers were: Cipla,
down 2.66 percent at Rs.700.05; HDFC Bank, down 1.53 percent at
Rs.1,040; Hindalco Inds, down 1.46 percent at Rs.137.90; HDFC, down 1.12
percent at Rs.1,290.30; and Hero MotoCorp, down 0.99 percent at
Rs.2,584.25.
Global markets too remained firm during the week
under review the DJ (Dow Jones), FTSE (Financial Times Stock Exchange),
and Nikkei gained 1.1 percent, 3.1 percent and 2.4 percent respectively.
(Rohit Vaid can be contacted at [email protected])