Sensex, Nifty sets to post biggest monthly gain in over four years

The S&P BSE Sensex and the Nifty 50 index are set to report their biggest monthly gain in past four years after a sharp rally in the stock market on back of strong inflows by foreign investors post the Budget announcement.

At 02:14 pm, the Sensex was trading at 25,451 and Nifty at 7,768, gaining 11% each during the current month, heads for best month since January 2012, when the Nifty had rallied 12.4%, while Sensex surged 11% on global cues.

Strong inflows from foreign institutional investors (FIIs) and foreign portfolio investors (FPI) have helped the market to rebound sharply.

FIIs & FPIs have put in Rs 21,327 crore ($3.18 billion) thus far in the Indian market during the current month (till March 29), according to data from National Securities Depository and Securities and Exchange Board of India.

In January 2012, FIIs had made net investments of Rs 11,090 crore ($ 2.18 billion) in Indian equities, followed by Rs 25,218 crore ($ 5.13 billion) in February. Total investor wealth of BSE-listed companies increased by Rs 9.02 lakh crore from Rs 85.83 lakh crore on February 29 to Rs 94.85 lakh crore today.

Among sectoral classifications, the rate sensitive sectors such as banks, auto and realty indices have rallied between 14%-20% on the back of a hope that the Reserve Bank of India (RBI) might cut key rates in the next Monetary Policy review on April 5.

“After five months of steady rise, the CPI dropped, to 5.2% in February, from 5.7% in January, making the case stronger for another repo rate cut by the RBI. The Budget’s focus on fiscal consolidation had already created conditions for the RBI to cut rates; we expect the policy rate to be sliced by 25-50 basis points (bps) in 2016. A benign inflation climate further allows for this; CPI, we believe, will stay soft at 5% average, unchanged from our estimate for fiscal 2016, if India is blessed with a normal monsoon,” CRISIL Research said in a note.

Tata Motors, Vedanta, Tata Steel, Hindalco Industries, Cairn India, Yes Bank, ICICI Bank, State Bank of India (SBI), Punjab National Bank, Adani Ports, Ambuja Cements, Bharat Heavy Electricals Limited (BHEL) and Bosch from the Nifty 50 index have rallied more than 20% each during the month.

  Gain in % FIIs inflow  Month Sensex Nifty  in $ billion January-12 11.25 12.43 2.18 March-16* 10.60 11.20 3.18 October-13 9.21 9.83 2.93 May-14 8.03 7.97 2.78 September-12 7.65 8.46 3.85         * At 02:14 PM       Source: Bloomberg, Sebi