The Indian markets closed higher for the third consecutive day after hitting another record on Monday with a global rally adding to the overall optimism and confidence among market investors. The BSE Sensex was up 166.96 points or 0.29% at 58,296.91. The Nifty gained 54.20 points or 0.31%, closing at 17,377.80. Stocks of other markets in the Asia-Pacific region were higher too, with Japan and China logging the best gains. The Nikkei in Japan and Shanghai in China were up 1-2%. US markets were closed on Monday on account of the Labor Day holiday.
Ajit Mishra, vice-president, research, Religare Broking Ltd, said the markets are steadily inching higher, tracking favourable global markets and supportive domestic sentiment. Mishra feels there may be some consolidation ahead. The India volatility index or India VIX gained 3.86% on Monday, closing at 15.11.
Hopes of continued economic support by the US Federal Reserve due to weak US jobs data and talks of more stimulus in Japan and China boosted global markets. Economic normalization attracted buyers in realty stocks, while safe haven IT stocks continued to lead the upbeat market, said Vinod Nair, head of research at Geojit Financial Services.
Foreign institutional investors (FIIs) have started to return to Indian equities after a major sell-off in July. In September so far, FIIs have pumped in $270.48 million in equities after an inflow of $779 million in the previous month. In July, FIIs had dumped Indian shares worth $1.7 billion.
According to Binod Modi, head strategy at Reliance Securities, the sharp revival in FII flow following dovish remarks by Fed chairman Jerome Powell and a rebound in the rupee led domestic bourses to see a sharp uptick in recent weeks. “Additionally, weak non-farm jobs data for August augurs well for emerging markets including India as it may prompt the Fed to maintain its current stance," he said.
However, domestic institutional investors (DIIs), including mutual funds, pension funds and banks, have started to sell shares. In September, DIIs were net sellers of Indian equities worth £23.75 million after investing £2.53 billion in the previous two months. Meanwhile, Morgan Stanley feels that a stronger recovery in India and Asean investment growth is expected to emerge from deep cyclical slowdowns.
