Stocks markets hit new high, but cool to WPI gains

MUMBAI: India’s benchmark indices closed at record highs on Friday, but gains were modest even as wholesale inflation fell to 5-year low and foreign institutions continued to purchase stocks.

Fund managers and analysts said markets were largely indifferent to the inflation figures as hopes of interest rate cuts by the Reserve Bank of India in December have dwindled.

BSE’s Sensex closed at an all-time high of 28046, up 106 points or 0.38%, over Thursday. NSE’s Nifty gained 32 points, or 0.38%, to end at a record high of 8389 points. “We believe the rate cut may happen post February next year,” said Nirakar Pradhan, chief investment officer at Future Generali India Life Insurance. “But we expect the market to rally further.”

Foreign institutional investors (FIIs) bought shares worth Rs 645 crore on Friday, according to provisional data. These investors poured close to Rs 12,400 crore into Indian stocks in the last 11 straight trading sessions.

“FIIs during the week continued their buying in equity markets as they bought over $700 million in shares such as banking, technology and midcaps,” said Pankaj Pandey, head of research at ICICI Direct. “We expect the Nifty to touch 8500 levels with support placed around 8300.” Domestic institutional investors — insurance companies and mutual funds — sold to the tune of Rs 517 crore on Friday, resulting in limited market upsides.

Wholesale price index (WPI) inflation for October dropped to 5-year low of 1.77% against 2.38% in September. “Markets rose to a record high after India's wholesale price inflation moderated more than market expectations. But RBI is unlikely to cut policy rates soon till prices stabilise post the base effect in November,” said Amar Ambani, head of research at IIFL.

Brent crude sank to 4-year low below $77 a barrel on Friday. Analysts said inflation is likely to head even lower with global crude prices easing and winter crop likely to push prices down.