Sensex edges up; strong fund flows boost rupee

Reuters/Mumbai

The BSE Sensex and Nifty edged higher yesterday, but continued to stay away from their record highs hit early in the week, as investors booked profits in some recent outperformers such as ONGC while buying into relative underperformers such as Tata Motors.

Both the Nifty and the Sensex hit record highs on Tuesday, bolstered by continued buying from foreign investors, with net purchases of $117.87mn on Thursday, their 23rd buying session in the previous 24.

Still, some of the momentum has waned. Nifty ended the week down 0.2%, its second consecutive week of falls, and 1.2% away from its record high of 6,574.94 hit on Tuesday.

Profit-taking after a strong rally, and some global factors, including a bout of selling tied to concerns that the Federal Reserve would raise interest rates earlier than expected, have pressured shares. “We are cautiously optimistic in the near term. The undercurrent is positive, but profit-taking is expected in select sectors and stocks. We will continue to see sectoral rotations-like that we saw in IT,” said Deven Choksey, managing director at KR Choksey Securities.

“We may see fresh positions building up after the monthly derivatives contract expiry, in the coming week.”

The Sensex closed 0.06% higher at 21,753.75. It lost 0.26% this week.The Nifty closed 0.16% higher at 6,493.2.

Meanwhile the rupee rose the most in two weeks to gain 0.5% for the week on the back of strong foreign flows into domestic markets even as other emerging Asian currencies buckled over concerns about US rates and China’s weakening yuan.

Foreign funds have poured in $3.8bn in domestic equities and bonds in March, sending indexes to record highs on Tuesday.

Optimism about the domestic economy has also played a role, given easing inflation and a sharply narrower current account deficit.“Good funds flows and domestic data have helped the rupee gain. I expect the currency to show further strength towards 60 to the dollar,” said Uday Bhatt, senior manager at UCO Bank.