Mumbai: Robust foreign fund inflows more than offset a two-session profit sales-triggered fall in shares, powering them 0.9% higher on Friday to their fourth straight weekly gain. Financials led the rise.
Foreign funds have pumped in $17.3 billion into Indian shares, helping the index gain 14.8% so far this year. Of this, $4.4 billion inflows were received in the current month, driving the benchmark up 11.5%. The 30-share BSE index .BSESN firmed 0.93% or 184.17 points at 20,0045.18, taking gains this week to 2.3%, with 25 of its components closing in the green.
“The sentiment is positive as India is outperforming its peers and is therefore, attracting huge foreign money,” said Nandip Vaidya, president of brokerage IIFL.
For the year to date, the Indian benchmark has outperformed its Bric peers in Brazil, Russia and China. Emerging market equity funds had more than $1 billion in inflows in the week to 22 September, bringing year-to-date inflows to about $45 billion, data from EPFR Global showed.
New money heading to India equity funds reached their highest level in nearly three years, the fund tracker said. “The situation globally is better than what it was six months ago. So, there is no big risk to the market right now.”
Financials marched ahead of optimism that loan demand would rise in the world’s second-fastest growing major economy. Leading lenders State Bank of India, ICICI Bank and HDFC Bank rose between 0.1% and 1.3%. Telecom stocks gained with leading operators Bharti Airtel and Reliance Communications rising 3.6% and 1.1% respectively, picking up after being the only two Sensex stocks which declined in 2009. Idea Cellular (IDEA.BO) climbed 1.2%.
“We believe valuation multiple for the telcos would expand in light of the improving pricing environment and robust volume growth,” Indiabulls Securities said in a note.
“Being a time-critical development, we thought we should highlight it immediately so that investors can act while we upgrade our estimates and target prices.” The brokerage reiterated “outperform” on Bharti, “neutral” on Idea and “underperform” on Reliance Communications.
Cigarette-to-hotel business ITC and India’s largest household products maker Hindustan Unilever logged gains riding on the strong domestic consumption story. ITC rose as much as 2.3% to its all-time high of Rs180.70 while Hindustan Unilever surged 4.8% to Rs317.25, its highest in a decade. The stocks later closed 1.3% and 3.9% higher respectively.
Outsourcer Mahindra Satyam, which was earlier known as Satyam Computer Services, declined 6%. Investors await their first peek into the audited financial results at the firm that was hit by India’s biggest corporate scandal nearly two years ago. The company will review its earnings for fiscal years 2009 and 2010 on 29 September.
“Optimism in Satyam’s growth prospects is being driven by overall buoyancy in demand seen in the Indian IT sector,” CLSA said in a note on Thursday. “However, we do not expect Satyam’s growth to follow the sector prospects in FY11 or even in FY12.”
Advancing shares outnumbered declining ones in a ratio of 1.6:1 on a relatively higher volume of 501 million shares.
The 50-share NSE index closed nearly 1% higher at 6,018.30 points.
At 4:00pm, world stocks measured by the MSCI All-Country World Index were flat, and the Thomson Reuters global stock index .TRXFLDGLPU dipped 0.5%.
State-run explorer Oil and Natural Gas Corp gained 1.1% to Rs1,437.35, after it said on Thursday two exploration discoveries have been notified to directorate general of hydrocarbons.
Sun Pharmaceutical rose 1.7% to Rs1,920.55, as the drugmaker’s board approved a 5-for-1 stock split.