RBI, Moody's lifted mood for Indian equities
Mumbai: The positive sentiment on India triggered by global ratings agency Moody's and the central bank's dovish language on the economy's prospects buoyed the markets for the second week, lifting a key index by 2.2 percent in the trade ended Friday.
Analysts expect the bull run to continue next week as well, beginning Monday, with the markets likely to respond positively to fresh official data on India's factory output that indicated the steepest growth yet in nine months at 5 percent.
The data had come after the closing bell Friday.
"The markets are expected to be in the positive territory due to the slew of data, ratings and guidance which show continued growth in the Indian economy," said Dipen Shah, head of private client group research, Kotak Securities.
"The rally of over 600 points last week was due to the relief on the US Fed front, the expectations of further rate cut by the central bank and government's fast pace on the reforms front," Shah told IANS.
Moody's revised India's sovereign ratings outlook to "positive" from "stable." Another ratings agency - Fitch - also reaffirmed its stable outlook on India.
The think-tank of the rich nations, the Organisation for Economic Cooperation and Development (OECD), also endorsed India's economic expansion projections.
India's factory output also mirrored the positive sentiment by showing an expansion of 5 percent in February over a 2.6 percent rise in January.
According to Devendra Nevgi, chief executive of ZyFin Advisors, the RBI's language in its outlook has strongly signalled future rate cuts depending on the bank's ability to pass on the benefits to consumer.
"The markets were pleased by a dovish language used by the RBI. On ther other hand the RBI has also clearly stated that any further rate cuts will depend on the economic data, and the bank's ability to pass on the previous interest rate benefit to consumers," Nevgi told IANS.
"The gains during the previous week were made after the markets factored in that the fourth quarter results will be subdued. Low crude oil and current data on inflation also buoyed the markets," he added.
However, Gaurang Shah, vice president of Geojit BNP Paribas, cautioned: "Our sense is that from now on one can expect some consolidation in the market keeping in mind the Q4 earnings season which will kick off very soon and the markets will take directional call from thereon depending on which sectors do well and don't in terms of earnings visibility."
Analysts pointed out that apart from the healthy industrial output figures for February, the expectations from the season's earnings and the March CPI (consumer price index) data to be released on Monday will also be the key triggers for the coming week.
The CPI-based inflation rose to 5.37 percent for February, from 5.19 percent in January and 4.28 percent in December 2014.
The benchmark, 30-scrip S&P Sensitive Index (Sensex) of the Bombay Stock Exchange (BSE) gained 619 points or 2.19 percent during the weekly ended April 10 to end at 28,879.38 points, against the previous week's close 28,879.38 points.
Most sector indices of the BSE closed positive with realty, FMCG (fast moving consumer goods) and metals gaining more than 5 percent each.
During the week before, the barometer index rose 801.55 points, or 2.91 percent.
Similarly, at the National Stock Exchange (NSE), the broader, 50-share CNX Nifty
The Sensex had ended the truncated weekly trade ended April 1 at 28,260.14 points, from a close of 27,458.64 points on March 27.
On Friday, the Sensex opened at 28,889.27 points and ended the day's trade at 28,879.38 points, down 5.83 points or 0.02 percent from the previous day's close at 28,885.21 points.
The major Sensex gainers on Friday were: Sesa Sterlite, up 3.65 percent at Rs.201.70; State Bank of India (SBI), up 1.85 percent at Rs.285.65; Dr.Reddy's Lab, up 1.62 percent at Rs.3,800.15; Bharti Airtel, up 1.12 percent at Rs.411.35; and Infosys, up 0.99 percent at Rs.2,233.30.