For the third successive fiscal ~ 29 March 2019 was the last trading day in Dalal Street ~ market participants are assured of a double-digit return for which, analysts say, the credit must go to incessant inflows of foreign funds and to a certain extent to earnings growth of India’s corporate and financial sectors in Q3 (that ended on 31 December 2018). The earnings graph is expected to rise further in Q4 (January-March 2019) when numbers will also be available for the entire FY 2018-19. The month of March has been the most productive for most brokerages as well as investors since foreign portfolio investors pumped in nearly $5 billion in domestic stocks which had been significant and a total reversal of their pulling out $4.5 billion in 2018. FPIs completely dominated trade in Dalal Street in January-March which ensured that the 30-share Sensitive Index of BSE and 50-share Nifty of NSE closes at a six month high.
The benchmarks increased 17 per cent and 14 per cent for the fiscal with BSE market cap also crossing Rs 1.51 lakh crore today which suggests in March investors’ wealth increased by almost Rs 10 lakh crore.
Sensex settled for the week and fiscal 2018-19 at 38,672.91 (+127.19) points, up 0.33 per cent. Nifty gained 0.47 per cent to close at 11,623.90 (+53.90) points. Nifty Bank was at 30,426.80 (+6.25) points, an increase of 0.02 per cent. In Sensex 19 shares moved up and were 11 down. For Nifty the ratio was 33:17. Gainers in BSE benchmark included Mahindra and Mahindra at Rs 674.60, up 2.69 per cent; Tata Steel at Rs 519, up 2.37 per cent; ONGC at Rs 160.30, up 2.13 per cent and HDFC at Rs 1,966.20, up 0.98 per cent.
March had been the most productive month for bulls and investors as index heavyweights such as Reliance Industries Limited, Axis Bank and Bajaj Finance ended the fiscal with 50 per cent gains. Besides, Tata Consultancy Services, ICICI Bank, State Bank of India, HUL and Infosys Technologies posted gains varying between 26 per cent and 50 per cent, according to data available with depositories and exchanges.
Analysts expect Q4 earnings of corporate and financials/banks to show gradual increase over their Q3 performance. The new earnings season will start by mid-April.
But before that markets are looking forward for a trigger in the first bi-monthly policy statement of the RBI due on 4 April. Bankers and brokers think the monetary policy committee of the central bank may effect a 0.25 per cent or 25 basis points reduction in its prime interest rate or repo rate at which it lends funds to commercial banks.
For businesses, corporates and financial sector the cost of funds depends on RBI’s repo rate. Those who see rate cut coming cite softer consumer inflation and RBI’s push to accelerate economic growth that has turned sluggish due to domestic and external factors.