Indian shares edged up to close a wee bit higher yesterday, snapping a three-session slide, as blue chips such as ITC gained, although broader advances were capped by foreign investors turning net sellers amid caution ahead of key inflation data.
Overseas investors sold stock futures worth $84mn on Thursday, marking a second consecutive session of outflows, according to exchange and regulatory data, on concern the US Federal Reserve likely to raise interest rates sooner than expected.
Foreign investors have been key drivers of India’s shares this year with a net $14.1bn in purchases so far this year.
The sustained inflow helped both the broader NSE as well as benchmark BSE indexes post their latest record highs on Monday, and mild gains for the week.
Analysts said global factors will be a key with the focus also shifting to economic data, with the Reserve Bank of India too set to review its monetary policy stance on September 30.
“We are seeing buyers coming at every decline. A lot of money, which was waiting in the sidelines is entering the market.
The rally is expanding into all sectors and this is the perfect demonstration of how a bull market will function,” said Jagannadham Thunuguntla, head of research and chief strategist at SMC Global Securities.
“However, investors need to be cautious as there could be mistakes in euphoria.”
The BSE index closed 0.24% higher at 27,061.04 yesterday. It has risen 0.13% in the week to post its sixth consecutive week of gains.
The NSE index also ended up 0.24% to close at 8,105.50, adding 0.23% through the week.
Blue-chips led gainers after recovering from recent falls. ITC closed 1.3% higher on value-buying after falling 2% over the past two sessions on reports of an increase in public smoking fines and a likely ban on cigarettes sold loose, or outside packs.
Shares of Maruti Suzuki gained 1.9% after the company’s chairman said the auto maker expects double-digit sales growth this year.
Shares in Tata Motors closed up 0.6% after Macquarie Securities raised the price target of the stock, saying it expects earnings to double over three years due to improved sales at its overseas Jaguar Land Rover unit.
Among the laggards, Sun Pharmaceuticals Industries ended 2% lower falling for the second consecutive day, after its unit Taro Pharmaceutical Industries recalled two lots of its Warfarin sodium tablets, prescribed to prevent blood clots, on September 2, according to the US Food and Drug Administration.
Jaiprakash Associates closed down 2.9% after Goldman Sachs downgraded the stock to “neutral” from “buy” and removed it from its Asia Pacific buy list citing uncertainty after one of its promoters sold a 1.45% stake in the company.
Rupee sees best single-day gain in a month
The rupee posted its biggest single-day gain in nearly a month yesterday as custodian banks and corporates sold the greenback aggressively, although broader sentiment remained cautious ahead of key events, including retail inflation later in the day.
Caution remains ahead of a key week for global risk, with the Federal Reserve set to hold its policy meeting amidst concerns it may move to raise interest rates, while Scotland is due to hold its independence vote.
For the week, the rupee fell 0.5%, its worst weekly fall since the week to August 1 with the domestic share market in a consolidation phase following a recent string of record highs, most recently on Monday.
“There was aggressive dollar selling by custodians and corporates today,” said Vikas Babu Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank.
“The rupee will remain in a 60.50 to 61.30 broad range next week. On the CPI, market expects a slightly lower number than in July,” he added.
The partially convertible rupee ended at 60.65/66 per dollar, 0.5% stronger than its Thursday’s close of 60.9250/9350. This is the rupee’s best single-day performance since August 14.
Traders will continue to monitor movements in other Asian currencies and shares for near-term direction.
In India, overseas funds have bought a net $32.90bn worth of debt and shares so far this year, but turned mild sellers in shares over the previous two sessions.