Healthy quarterly numbers and bond yield moderation cheers markets

Mumbai, May 23:

A healthy set of quarterly results coupled with the moderation in US and German bond yields and Greece’s timely settlement of some its dues led a benchmark index of the Indian equities markets to make gains in the previous weekly trade.

stock_exchange sensexThe barometer 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE) closed the weekly trade ended May 22 with gains of over 2.30 percent or 634 points.

The Sensex had ended the trade session at 27,957.50 points. For the previous weekly trade ended May 15, the BSE Sensex had closed at 27,324 points.

The S&P BSE Sensex had gained 0.80 percent or 218.61 points during the weekly trade ended May 15.

The Sensex had closed the trade session on May 15 at 27,324 points from 27,105.39 points reached on May 8.

The Indian equities markets saw healthy participation of domestic investors on the back of a rate cut hope and better quarterly results.

During the week under review the higher bond yields in the US and Europe and the anxiety over Greece’s ability to pay its dues also subsided.

The markets also became cheaper to invest-in after two consecutive weeks of correction. This led the stocks to come closer to their long-term return averages.

“We have had correction in the last 2-3 weeks. This has made the markets a bit cheaper for the long-term domestic investors to enter in. Majors like LIC have invested-in the markets lately,” Devendra Nevgi, chief executive of ZyFin Advisors, told IANS.

“The valuations have become cheaper and are closer to their long-term return averages. The moderation in corporate growth and dying-down of euphoria about the new government’s reforms agenda has also been factored-in,” Nevgi further said.

According to Sanjeev Zarbade, vice president for equity research with Kotak Securities said that the global markets were largely positive for the week with gains of 0.1 percent, 1.1 percent and 2.7 percent for the Dow Jones, FTSE and Nikkei respectively.

“The Sensex continued to recover from the lows of the previous week. During the week there has been cooling off-of US bond yields. Even crude oil price has eased off. Among the major results during the week, SBI numbers were a mixed bag but ITC numbers were below expectations,” Zarbade said.

Other companies which came out with healthy results were Britannia India and Voltas.

Vinod Nair, head of fundamental research with Geojit BNP Paribas Financial Services said that the markets edged-higher on the rate cut hopes despite volatility brought by the fourth quarter results.

“Such volatility is likely to continue as about 40 percent of Sensex constituent’s results are awaited. This might impact the pace of index moving to higher levels as the result expectation balance are low,” Nair elaborated.

Nair pointed-out that on the positive side, foreign funds outflow ceased and that the DIIs (domestic institutional investors) have been active.

The out-flow of foreign funds due to minimum alternate tax (MAT) stopped after government’s assurances that no new tax notices will be served and that expert committee on the issue was formed on Thursday.

The MAT on capital gains is expected to impact the margins of foreign funds. This has hit their investment appetite for the Indian equities market.

According to data with the National Securities Depository Limited (NSDL), the ‘Foreign Portfolio Investors’ (FPIs) bought stocks worth Rs.2,120.77 crore or $333.33 million in the week ended May 22.

For the previous trading week ended May 15, FPIs off-loaded shares worth Rs.1,854.25 crore or $289.02 million. (IANS)

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