Indian shares closed little changed on Friday, but ended the financial year at an all-time high. Equity benchmarks clocked their best quarter since June 2014 as investors cheered a thumping win for Prime Minister Narendra Modi-led Bharatiya Janata Party in the recent state elections.
Corporates managed to emerge out of the demonetisation shock relatively unscathed, which aided the sentiment. “The biggest trigger for our market continues to be liquidity inflows,” said Ajay Srivastava, managing director of financial consultancy Dimensions Consulting.
Chart: Indian Stocks Are The Safest Bet During A Global Slump
We do not expect any major change in the market direction with the beginning of the new financial year and expect the Nifty 50 Index to test 9,300 soon. Now, all eyes are on the Reserve Bank's policy meet next week and, as a result, rate-sensitive stocks will continue to trade volatile. We suggest keeping leveraged positions hedged and avoid contrarian trades.Jayant Manglik, President, Retail Distribution, Religare Securities
Overseas funds pumped in over $6 billion into local equities since 2016-end, of which $4.5 billion came in this month. The U.S. Federal Reserve's dovish tone on future rates hikes made Indian assets attractive. But it was the domestic funds that formed the backbone of the rally, helping Nifty 50 hit a record of 9,218.
Domestic institutional investors are currently buyers of Indian equities worth Rs 98,800 crore since the general elections in May 2014, largely on the back of mutual funds buying equities worth Rs 1.63 lakh crore (with Rs 44,100 crore coming in between October 2016 and February 2017).Ambit Capital Report
Foreign inflows into Indian stocks and bonds propelled the rupee to its best first-quarter performance since 1975, according to a Bloomberg report. The Indian currency, Asia's best performer this month, has rallied 4.7 percent since December.
While some pullback in the near term cannot be ruled out given an ‘overbought' level on the momentum indicators, the rupee is likely to appreciate further and touch levels close to 63.5 in the sessions ahead.Ambit Capital Report
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