Supply of new paper could cap further gains; FIIs continue to sell equities
Pavan Burugula | Mumbai Last Updated at October 12, 2017 23:05 IST
The National Stock Exchange’s benchmark Nifty index on Thursday posted its biggest single-day gain since May 25 to close decisively above the psychologically-important 10,000 level. The gains were led by a nearly four per cent rally in index heavyweight Reliance Industries, which closed at a new lifetime high of Rs 875.60.
The 30-share Sensex gained 348 points, or 1.1 per cent, to close at 32,182, after climbing to 32,210 during the day. The Nifty closed at 10,096, less than 60 points, or 0.6 per cent, shy of a new record high.
The gains were also supported by positive global cues, with US equities closing at a new record high and the Japanese market recording its highest level in two decades.
On Thursday, foreign institutional investors (FIIs) sold shares worth Rs 668 crore, while the domestic institutions bought equities worth Rs 872 crore, according to provisional data from the bourses.
Since August, FIIs have sold shares worth Rs 20,000 crore, while MFs have pumped in close to Rs 50,000 crore.
Going ahead, market performance could be muted due to huge line-up of new equity offerings and also uncertainty surrounding the September quarter earnings.
GIC Re’s Rs 11,400-crore IPO (initial public offering), the country’s third-largest, closes on Friday. The government has lined up two more Rs 10,000-crore-plus offerings, that of New India Assurance and Bharat-22 ETF, in the subsequent weeks. The big-ticket offerings come amid sell-off by foreign institutions.
“We are going to see an unprecedented supply of fresh paper hitting the market over the next few weeks. This could negatively impact the secondary market. There is a major risk-off among overseas investors. Domestic investors may redeem some of their investments to participate in the new offerings,” said an official with a foreign brokerage.
“We expect another $4 billion of supply over the next three months, and as such, higher foreign flows would be needed to support the market. Foreign flows are unlikely to improve in the near term, as earnings momentum in the rest of Asia is far better than that in India and valuations are cheaper,” said Mahesh Nandurkar, India strategist, CLSA.
First Published: Thu, October 12 2017. 23:05 IST