Mumbai: The main BSE index rose 1.2% on Monday to its highest closes since 10 May, as improved global risk sentiment spurred buying in financials such as SBI and other blue-chips that have taken a beating this month.
The domestic gains tracked higher Asian markets, as opinion polls showing a lead for Greece’s pro-bailout camp helped calm fears the country would exit the euro zone.
Market participants, however, warn of further volatility ahead given Indian shares are responding to global cues, while the expiration of domestic equity derivatives and the January-March quarter economic growth data are due on Thursday.
Further ahead, markets would need some type of assurance from the government about fiscal consolidation -- given that worries about India’s current account and fiscal deficits have exacerbated losses this month.
India on Monday said it had no immediate plans to raise the retail prices of diesel, kerosene and cooking gas, sending state oil companies lower, though it failed to have a big impact given traders had already reduced expectations about such an increase.
“Hopes of European situation is getting resolved had a rub-off on the markets; 4800 on Nifty seem to be attracting some buying. Hopes of either a good GDP or rate cut in the other scenario also added to the rise,” Sajiv Dhawan, managing director of investment advisory firm JV Capital Services.
The main 30-share BSE index rose 1.2% to 16,416.84 points.
Markets rallied on Monday after an improvement in global investor sentiment. Mint’s Krishna Merchant looks at the stocks gained in the bull run, and those that were trampled
The broader 50-share NSE index advanced 1.3% to 4,985.65 points, its highest close since 8 May.
Despite the bargain-hunting seen on Monday -- given the BSE index has fallen 11% since its 2012 high on 22 February--analysts see little catalysts ahead.
A prolonged delay in fuel price hikes remains a key worry, after the government came under pressure last week for allowing a petrol price hike, while investors are also concerned about slowing growth at a time of inflationary pressures.
Foreign institutional investors (FIIs) are also selling, albeit in small amounts. They sold a net Rs 624 crore ($112.63 million) in shares on Friday, as per provisional exchange figures, bringing their tentative monthly total to 4.35 billion.
“Situation is still precarious. If Nifty moves to 5,100-5,200 then people may look to lighten up portfolios or short sell,” Dhawan said.
Still, there have been pockets of winners in May.
The banking index rallied 2.6% on Monday, with top lender State Bank of India surging 4.7%, on hopes of improving asset quality in the sector.
Since reporting better-than-expected Q4 net profit on 18 May, SBI shares have gained 13.7% as of Monday, compared to a 2.4% rise in the NSE index in the same period.
Bargain-hunting boosted some blue chips as well.
Power equipment maker, Bharat Heavy Electricals Ltd , rose 4.3%. Shares earlier this month fell to their lowest since October 2008.
Reliance Industries ended 1.5% higher, having gained 4% since hitting its lowest intraday level since March 2009 on May 16.
Among other gainers, Tata Motors rose 2.8% ahead of its earnings results due on Tuesday.
However, among decliners, state oil companies fell after Oil Minister S. Jaipal Reddy said on Monday the country had no immediate plans to raise other fuel prices beyond petrol.
Oil and Natural Gas Corporation fell 1.24%, while Hindustan Petroleum Corp lost 1%.