Mumbai: The current month has seen the domestic equity market registering their biggest monthly gain since January 2012 as improving risk appetite in the global markets had triggered strong buying in beaten down front line stocks.
The trend is expected to continue going forward as India-focussed funds have started seeing fresh inflows from global investors.
During the current month till date, the Sensex has gained 10.15 per cent while the Nifty has rallied 10.44 per cent. The Nifty is the second best performing equity index in the Asia Pacific region next only to China’s Shanghai Comp-osite, which has rallied 11.98 per cent in this month.
According to EPFR Global, the emerging markets portfolio flows tracker, inflows into India Equity Funds were solid for the second week running as investors continue to reassess this market in light of its relatively high growth, the tailwinds provided by cheaper oil and the government’s latest budget. India Equity Funds posted consecutive weekly inflows for the first time since early November 2015. However, EPFR pointed out that fund managers are a bit cautious, with India’s average allocation among Global Emerging Market Equity Funds dropping below Taiwan’s for the second time in the past 17 months.
“Buying from foreign funds is likely to continue. We believe that the next big trigger for the market will be RBI’s policy meeting on April 5. There is already rampant speculation that RBI will slash its repo rate after the government pared interest rates on small savings plans on March 18. The expectation has risen after finance minister Arun Jaitley in his budget pledged to further cut the fiscal deficit and took steps to boost rural demand,” said Vijay Singhania, founder and director, Trade Smart Online.
Till date in March, foreign portfolio investors have bought shares worth '15,665 crore. They rema-ined net sellers during the previous four months offloading shares worth Rs 26,538 crore. “At the global level, commodity prices have shown some signs of stability after a steep slide. On the other hand, the US Federal Reserve kept its rate unchanged in its latest meeting and also indicated that there won’t be more than two rate hikes this year.
Earlier market participants were expecting at least four hikes in 2016. This has supported the global market sentiments,” said Uday Narayan Dubey, vice-president, institutional desk at R.K.Global. Since, the domestic equity markets have already priced in a 25 basis point cut in interest rate by RBI in its April meeting, Mr Dubey pointed out that India Inc’s Q4 earnings number would be the next major trigger for the market.
