After three months of selling, FPIs have invested Rs 18,613 crore in the Indian market in June, so far, as sentiment has improved amid graded lifting of lockdown curbs, NSDL data shows.
The Indian market benchmark Sensex jumped about 2 percent in the morning trade on June 8, supported by a rally in heavyweights such as ICICI Bank, Infosys and HDFC as investor sentiment improved after easing of lockdown.
The Sensex surged more than 600 points while the Nifty traded above 10,300 in the morning. The rally was spread out as the BSE Midcap and Smallcap indices also jumped up to 2 percent.
Sectorally, banks, financials, oil & gas and IT were among the leaders, while BSE Healthcare traded with mild losses.
Here are the top five factors that underpinned the rally in the market.
Unlock 1.0 begins
The first phase of 'Unlock India' began June 8, with malls, restaurants, hotels and places of worship reopening across the country but with some restrictions.
Market observers see this as one of the major reasons behind rising markets, as investors hope that the economy will gradually come back on track.
Unlock 1.0 is the first of a three-phase plan for the reopening of areas that have fewer coronavirus cases, with a stringent set of conditions that will remain in place till June 30.
Foreign fund inflow
After three months of selling, foreign portfolio investors seem to have turned bullish on the Indian market. Data from NSDL shows that FPIs have invested Rs 18,613 crore in the Indian market in June, so far, as sentiment improved amid graded lifting of lockdown.
Besides, Reliance Industries' mega rights issue, which closed during the week and was oversubscribed, and stake sale of 2.8 percent by Uday Kotak in Kotak Mahindra Bank attracted significant foreign flows.
NSDL data shows, in March, April and May, FPIs took out Rs 1,18,203 crore, Rs 14,859 crore and Rs 7,356 crore, respectively, from the Indian market.
Experts say FPIs have been investing in fundamentally strong blue-chip companies and this trend is likely to continue.
Positive global cues
Positive global cues also underpinned the rally in the Indian market.
Major stock markets of the world edged higher on June 8 after a surprise recovery in US employment data provided hope that global economies could quickly revive after many weeks of lockdowns to check the spread of the coronavirus, reported Reuters.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 percent, extending its bull run to the eighth consecutive day.
Japan's Nikkei, China's Shanghai Composite Index, Korea's Kospi were all trading in the green.
Traction in banking, financial stocks
The Nifty Bank index jumped almost 4 percent in the morning. The index was trading above 21,500-mark.
Shares of IDFC First Bank, IndusInd Bank, Bandhan Bank, Axis Bank and SBI jumped up to 8 percent.
The Bank Nifty may accelerate its upside movement by more than 1,500 points. The first level we may see on the index is 22,000, and then 22,500, Sumeet Bagadia, Executive Director at Choice Broking, said in an interview to Moneycontrol.
Technical factor
As per technical charts, market experts believe te Nifty is not eyeing 10,500.
"The positioning of RSI-Smoothened indicates the possibility of extending this move towards 10,500-10,700 levels. Hence traders are continuously advised to stay on the positive side as long as 9,900 is being held," said Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel Broking.
Nifty's weekly charts are projecting strength in the medium-term with back-to-back strong bullish candles, say experts. Hence, on correction, any stability in the 9,700–9,550 zone shall be considered an opportunity to create fresh longs.
The day's gap-up opening above the important resistance level of 10,200 made the Nifty enter into the new zone near 10,500.
"The market saw a gap-up opening at 10,326, which is above the important resistance level of 10,200. This makes the Nifty enter into the next zone where we should be projecting a new level of 10,450-10,500. The support for this market now lies at 9,950-10,000," said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management.
