D-St gets into pre-poll mood as FPIs bet big on stocks

Bulls appear to be showing no signs of fatigue, as the market is gearing up for a pre-election rally buoyed by hopes that the ruling NDA government could get a majority for the second term. Market sentiment was also strengthened on the back of strong global cues.

Since the beginning of March, benchmark 30-share Sensex has gained 1668.22 points, or 4.65%, just in 7 sessions as foreign investors showed renewed interest while rupee recovered its lost ground. The broader Nifty gained 508.70 points or 4.71%. On Tuesday alone, the Sensex gained 481 points while Nifty advanced 133 points.

The broader market has continued with its northbound journey as both the BSE Mid-cap and Small-cap gauges rose by 0.65% and 1.07% respectively.

“We will continue to see this rally in the indices till April, but close to the elections results the volatility may return,” said G Chokkalingam, founder and managing director, Equinomics Research and Advisory. “The mid-cap and small-cap space have already seen a loss of almost Rs 25 lakh crore. They will now rebound and can outperform the large-cap ones too. We will also see a good 15-20% rally in quality stocks in the coming days,” he said.

Analysts think the only concern could be the potential spurt in crude oil prices. Global crude benchmark Brent crude futures rose 0.98% to $67.23 per barrel on Tuesday.

Sector-wise, except BSE Information Technology (-0.22%), all the other 18 sector sub-indices ended in the green zone with BSE Realty taking the pole position rising 2.60%. The rising rupee, however, dragged the IT sector. The rupee on Tuesday strengthened by 25 paise to 69.64/$ during the early trade, driven by foreign fund inflows and a weaker dollar against key rival currencies globally. The domestic currency closed at 69.71/$, gaining 0.18 paise.

Analysts had previously said that foreign investors would not miss the pre-election rally and it seems to be true now. Foreign investors have started buying in the domestic market after a long time. Overseas investors have pumped in a net Rs 2,741 crore into the Indian capital markets in the first five trading sessions of March, mainly due to positive market sentiment. In February, foreign portfolio investors (FPIs) had invested a net amount of Rs 11,182 crore in the capital markets (both equity and debt).

As per the provisional data, the FPIs bought shares worth Rs 2,477.72 crore on Tuesday while domestic institutional investors (DII) sold shares worth Rs 990.48 crore on a net basis.

According to a report by Motilal Oswal Financial Services, Nifty surpassed its resistance trend line of the sideways channel and closed above the same with the formation of the bullish candle on a daily scale which indicates bullish bias. Now it has to continue to hold above 11200 to extend its gains towards 11400-11450. Overall setup and momentum are positive and a follow-up could continue its extended momentum while immediate support exists at 11200 and then at 11118.

On Tuesday, the 30-share Sensex closed at 37535.66 jumping 481.56 points or 1.30%. Since the beginning of the year, the gauge has gained 1281.09 points, or 3.53%, so far. The broader Nifty also had a positive day settling at 11301.20 surging 133.15 points, or 1.19%. During the intra-day trade, the 50-share index traded between 11229.95 and 11320.15.