Markets close at nearly 10-month high

Equities ended Friday’s session close to their all-time highs on account of strong cues from Asian markets and improving macroeconomic data domestically. The Nifty50 rose 143.25 points (1.18%) to close at 12,263.55. The Sensex closed Friday’s session at 41,893.06, a jump of 552.9 points (1.34%).

The Nifty and Sensex rose 5.2% and 5.4%, respectively, for the week. The markets have recovered from their losses this year and are trading at the levels seen in January.

On Friday, equities were pulled higher by the gains in index heavyweights Reliance Industries and HDFC Bank. However, uncertainty remains on whether the markets can sustain at current levels. Sanjeev Hota, head of research, Sharekhan by BNP Paribas, said, “The markets have been reacting to the US elections and the strong Q2 numbers. It is, however, hard to say whether the current levels will be sustainable. I think there could be some volatility…”

Asian markets continued to rally taking cues from the Wall Street as Joe Biden’s lead continued to widen over Donald Trump. The Asian markets closed the trading session higher, with the stock markets in South Korea, Taiwan, and Japan rallying between 0.1% and 0.9%. The European bourses in the UK, Germany, and France were down between 0.1% and 0.67%.

While the global momentum this week has supported the Indian markets, improving macroeconomic data have also helped improve the risk-on sentiment. Sanjeev Zarbade, vice president – private client group research, Kotak Securities, said: Positive macroeconomic data on core sector growth, rebound in GST revenues and robust power demand are driving the economic recovery. Earnings announcements have also been largely positive and many of the frontline companies in IT and private sector banks have reported higher-than-expected profits. All these have boosted the investor sentiment. Going ahead, we would sound a word of caution as valuations are almost fair.”

Foreign portfolio investors have also remained strong buyers in Indian equities this week, pumping in $1.07 billion in total. Conversely, domestic institutional investors have been sellers, pulling out Rs 3,851.2 crore from equities. On Thursday, FPIs bought stocks worth $725.4 million whereas domestic institutional investors sold stocks worth $298.4 million.