Sensex rallies 327 points on Friday after RBI steps to boost liquidity

The equity markets continued their winning streak and rallied for the seventh straight session on Friday. Market participants say the accommodative stance from the Reserve Bank of India (RBI), strong flows from foreign players and positive global markets were the key reasons for the rally.

The Sensex rallied 326.82 points, or 0.81%, to close at 40,509.49, while the Nifty was up by 79.60 points, or 0.67%, to end the day at 11,914.20. In the last seven session, Sensex has gained by 7%.

After offloading equities worth $ 767.28 million in September, foreign portfolio investors (FPIs) turned net buyer for the month. In October so far, they bought shares worth $ 745.85 million. However, on Friday, they sold shares worth $ 5.4 million, provisional data on the exchanges showed.

UR Bhat, director at Dalton Capital Advisors, said that from the international point of view, news of US President Donald Trump returning to office from Saturday and hope of some sort of quantitative easing helped the markets in US. “As far as India is concerned, the recent rally can be attributed to strong flows from FPIs in the last few days. While the RBI in its policy said that gross domestic product (GDP) might be negative, but in the fourth quarter of the current financial year, a turnaround is likely to take place and all these factors helped Indian markets to move up on Friday.”

Among the 19 sectoral indices complied by BSE, the BSE Bankex index rallied the most with a gain of 2.64%, followed by the BSE Finance index, which up by 1.82%. The stocks that helped the Sensex move up were from the banking sector. ICICI Bank, Axis Bank, SBI and HDFC Bank were the top performer in the Sensex.

S Hariharan, head – sales trading at Emkay Global Financial Services, said, “This week was marked with strong out-performance by financials, with accommodative RBI policy measures and further evidence of rebound in economic activity driving optimism on the asset quality front. As Nifty approaches lifetime high, we can expect rotation of performance among sectors with sideways movement in broader indices and a consolidation of strong market performance.”