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Mumbai: Benchmark indices ended up for the seventh consecutive session on Friday, posting their longest gaining streak since November last year.
Sentiment was boosted as retail inflation data, released after market hours on Thursday, eased to a five-month low in March and industrial output grew at 7.1 per cent in February.
The Nifty reclaimed the 10,500 mark for the first time since March.
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Indices also logged a third consecutive weekly gain, with Sensex gaining 1.7 per cent and Nifty 1.4 per cent.
With this performance, Indian markets are now the best performing among Asian markets so far in April with a gain of 3.6-3.7 per cent.
The Nifty has recovered 5.3 per cent from the recent low of 9951.90 which was hit on March 23.
The Sensex gained 91.52 points, or 0.27 per cent, to end at 34192.65 and the Nifty ended up 21.95 points, or 0.2 per cent, at 10480.60.
The India VIX ended down 2.9 per cent at 14.14.
Adani Ports, Wipro, Coal India, Kotak Mahindra Bank, Dr Reddy’s Laboratories and Reliance Industries were the top Sensex gainers, ending up 1.2-2.7 per cent.
Provisional data showed foreign portfolio investors net sold shares worth nearly Rs 400 crore on Friday, while domestic institutional investors bought shares worth Rs 306 crore.
“The recent market recovery is on the back of some improvement in domestic bond markets and decline in bond yields,” said Sanjeev Prasad, co-head, Kotak Institutional Equities.
“The market also believes that US and China’s statements are largely talk and any action will be muted.
There is expectation that they will reach a middle ground and it will not escalate into a full-blown trade war,” said Prasad.
The recovery in Indian markets after a fall of 8 per cent in February-March comes at a time when oil is hovering around $70 per barrel.
“A combination of expectation of economic recovery leading to earnings growth, and short covering have helped the market.
There has been a change in foreign investor sentiment after the government ended the logjam in the bond market,” said Abhay Laijawala, head of research at Deutsche Equities India.
“If markets continue to remain strong, then there can be another bout of short covering which can take the markets higher,” said Laijawala.
Sanjiv Bhasin, executive VP, markets and corporate affairs at IIFL, said he expects markets to scale new highs in the coming months.
“If BJP wins Karnataka elections, then it can bring more stability into the market.
I expect the market to hit new highs between May and October as earnings catch up,” said Bhasin.
However, Sanjeev Prasad of Kotak Institutional Equities believes that the market is not out of the woods yet.
“There is a disconnect in terms of how the bond market is seeing macro going ahead and how the equity market is seeing it.
If macro does not change, PE multiples can come down again,” said Prasad.
“The downside risks are not over.
It remains to be seen whether GST revenues will pick up.
The market has assumed 20 per cent earnings growth in FY19 but whether that will come, depends on a lot of factors,” he added.
