Domestic benchmarks Sensex and Nifty ended on a bullish note on Friday, led by heavy buying in banking and financial stocks amid mixed global cues. Extending gains for the sixth consecutive session, Sensex ended 353 points higher at 39,467 and Nifty ended 96 points higher at 11,655. During the week, Sensex and Nifty have risen 1,032 points (2.69%) and 275 points (2.42%), respectively.
Axis Bank, followed by IndusInd Bank, ICICI Bank, L&T, Tata Steel, Sun Pharma and ONGC were among the top gainers on the Sensex pack. On the other hand, HCL Tech, Kotak Bank, Asian Paints, Infosys and HDFC Bank were among the laggards. Sectorally, except auto, FMCG and metal, all the other indices closed in green territory, with major gains in banking and financial scrips.
Foreign portfolio investors (FPIs) bought shares worth Rs 1,164.32 crore, while domestic institutional investors (DIIs) were net sellers to the tune of Rs 809.27 crore in the Indian equity market on August 27, provisional data showed.
Commenting on today's rally, Nirali Shah, Senior Research Analyst, Samco Securities said, "August marked the highest monthly levels of FPI equity inflows in history with nearly USD 6 billion. This number should not be read in isolation as all inflows are not through secondary markets alone, a major part has been channelized through FPOs and QIPs too."
On the currency front, the rupee ended at 73.39 per dollar, as against Thursday's close of 73.84. The local unit has risen 1.9% this week, its biggest weekly rise against the dollar since the week ended December 21, 2018.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.19 per cent to 92.82. The dollar index fell today post-Fed Chairman's speech in which he hinted at shifting the inflation target.
Commenting on rupee, Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking said, "Some kind of rupee appreciation was largely due, given the weakness in the dollar index and a risk-on sentiment globally as the economic activity is gradually picking up. Once the rupee broke above its crucial 74.50 mark, the RBI has not stepped in aggressively and allowed the rupee to appreciate probably because it has sufficient reserves, and aggressive intervention at this stage may not lead to significant value addition, given the extent of inflows. Moreover, we think the RBI did not want the market to be complacent for quite some time, and hence chose to loosen its grip on the rupee for the time being."
On its technicals, she added, "We are expecting the rupee to test levels of 72.80 in the immediate near term if this scenario persists. The RBI would probably look to intervene in the forwards market for the time being".
Global equities showed a mixed trend as investors kept holding a cautious stance over the central bank's policy path and inflationary views.
Asian and European markets continued to trade on a mixed note, while Wall Street stocks closed mostly higher after the Fed Chairman said that policymakers would no longer pre-emptively hike interest rates to stave off inflation by adopting a new approach.
Vinod Nair, Head of Research at Geojit Financial Services said, "Global markets were trading uncertain following the US Fed reserve's policy shift to focus on economic growth and less on inflation. However, the indication that the US Fed would continue to let interest rates remain low and expectation of more stimulus to follow, boosted the Indian markets. The stimulus and the associated liquidity are important to our markets since that has been one of the drivers for the current stock market run."
As per technical outlook, Nifty opened at 11,611 and closed at 11,655 mark, above its earlier resistance observed at 11,604 and then at 11,649 levels. Meanwhile, Sensex closed just below 39,500.
Expressing views on the outlook of week-ahead, Vinod Nair added, "The economic data coming out indicates a slow recovery in progress for the Indian economy and as such the GDP data due out next week, is expected to be a non-event, barring any surprise deviation. The market is expected to continue the momentum."
"Mid and smallcaps are correcting / consolidating as expected. Some profit taking in these is advisable. Within largecaps, banks have been doing well for the past 5-6 sessions and we could soon see a shift in attention to some other sector. Nifty continues to do well gaining ground gradually without raising too many eyebrows," said Deepak Jasani, Head Retail Research, HDFC Securities.