The benchmark stock indices recorded historical high on Friday on the back of bond-buying stimulus programme announced by the European Central Bank (ECB) which would result in more funds flowing to emerging market economies.
In a move to revive the economic growth and fight off deflation, the ECB said on Thursday that it would purchase sovereign debt (Quantitative Easing) from this March until the end of September 2016.
“The stimulus package infused by the ECB is going to have the positive impact on the liquidity situation which in turn will find its way in different assert classes which will drive the stock prices in the market,” said Deven Choksey, Managing Director, K R Choksey Shares & Securities.
According to him, India is offering the biggest opportunity to foreign investors among the emerging market economies.
The rupee also strengthened to 61.44 per US dollar compared to the previous close of 61.70 on Thursday
The Bombay Stock Exchange (BSE) 30-share Sensitive Index (Sensex) gained 272.82 points or 0.94 per cent to close at 29,278.84. However, it touched a high of 29408.73 in the intra-day.
Except consumer durables which lost 0.25 per cent, all other sectoral indices ended in the positive territory with auto stocks leading the rally by 1.51 per cent followed by realty 1.48 per cent and capital goods at 1.32 per cent.
“The markets opened higher and made new life time high on the back of positive global cues. The global markets were up as the European Central Bank announced it will buy bonds worth 60 billion euros per month to support the economy,” said Alex Mathews, Head Research, Geojit BNP Paribas Financial Services Ltd.
Among broader indices BSE 100 gained 0.85 per cent, BSE 200 was up by 0.75 per cent and BSE 500 gained 0.64 per cent.
Mid-cap and small-cap stocks, however, lost by 0.14 per cent and 0.73 per cent respectively.
On the National Stock Exchange (NSE) a broader 50-share Nifty closed at 8835.60 with a gain of 74.20 points or 0.85 per cent.
But Mr. Mathews added that higher level profit booking was also witnessed in the domestic front due to overbought situation.
“Markets ended the week with 4 per cent gains on benchmarks. Sentiment was buoyed by the higher-than-expected stimulus measure by the ECB as well as the optimism created by RBI’s rate cut last week,” said Dipen Shah, Head- Private Client Group Research, Kotak Securities.
Marginally better-than-expected growth numbers in China helped several metal stocks. “One of the notable features of the week was the stark under-performance of the mid caps with the relevant index up by just about 1 per cent,” said Mr. Shah, adding, “FII flows remained buoyant and lent adequate support to the markets.”
Further he said that the remaining part of the quarterly results as well as budget expectations will drive markets and specific stocks over the next one month. “Strong action of the fiscal reforms front will lead to further rate cuts from the RBI and help in overall improvement of growth rates and profitability.”
