Sensex Ends 269 Points Higher; IT and Power Stocks Witness Buying

Fri, 15 Mar Closing

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Indian share markets witnessed some selling but managed to trade in the green during closing hours and ended their day on a positive note. Gains were largely seen in the IT sector and information technology sector.

At the closing bell, the BSE Sensex stood higher by 269 points (up 0.7%) and the NSE Nifty closed higher by 84 points (up 0.7%). The BSE Mid Cap index closed up by 0.6%, while the BSE Small Cap index ended the day down by 0.3%.

Asian stock markets finished on a positive note as of the most recent closing prices. The Hang Seng stood up by 0.6% and the Nikkei was trading up by 0.8%.

European markets were also trading on a positive note. The FTSE 100 was up by 0.5%. The DAX was trading up by 0.4%, while the CAC 40 was up by 0.5%.

The rupee was trading at 69.11 to the US$ at the time of writing.

In the news from the finance space, IIFL Holdings share price was in focus today. Stock of the company witnessed buying interest today on the National Company Law Tribunal's (NCLT) nod to the proposed demerger of the group.

The NCLT has approved the proposed demerger of Fairfax-backed IIFL Group, which paves the way for the listing of three entities viz. IIFL Finance, IIFL Wealth, and IIFL Securities. The listing can be done within 60 days.

According to the arrangement, for every seven shares of IIFL Holdings, a shareholder will get seven shares each of IIFL Finance and IIFL Securities, and one share of IIFL Wealth.

Moving on to other news, data available with the NSE showed foreign portfolio investors (FPIs) bought Rs 14.8 billion worth of domestic stocks in yesterday's trading session.

Domestic institutional investors (DIIs), on the other hand, were net sellers to the tune of Rs 8.2 billion.

Note that overseas flows into domestic equities in February were the highest in 12 months. Foreign portfolio investors (FPIs) bought stocks worth US$1.9 billion, the highest since March 2018 when they had pumped in over US$2 billion.

FPIs have been taken out money in seven out of 12 months.

The reversal in overseas flows seen last month will boost investor sentiment, which has been hit due to escalation in cross-border tensions between India and Pakistan.

However, this flow tally needs to be taken with a pinch of salt.

The market has seen single-day FPI investment of US$1.7 billion, the highest in 4 years. This was on account of share sale by Dutch bank ING Group in Kotak Mahindra Bank.

As per the reports, high inflow tallies this month isn't necessarily due to change in sentiment. FPIs continue to remain cautious ahead of elections.

Indian equities have had a tough time in the past one year. With elections around the corner, volatility in the markets has been on a constant rise.

Till date in FY18-19, foreign investors have pulled out around Rs 515 billion from the Indian equity market.

But there's also an interesting development seen this time...

In the past, such panic would have meant the domestic investor would have followed suit.

That hasn't happened this time.

Domestic investors have shown surprising resiliency to the market's volatility.

The month-wise SIP in FY18-19 has seen a constant rise.

Also, close to 1 million new SIP accounts have been added during FY18-19 according to AMFI.

The days of knee-jerk panic withdrawals by individual investors are slowly but surely reducing.

If they ride out this volatility they will see the benefit of the cycle turning in their favor.

That will mark a significant change in the mindset of the retail investor for the long term.

In other news, as per a leading financial daily, fund managers of top 10 fund houses by assets under management (AUMs) in India have shown considerable interest in public sector undertakings (PSUs) in February.

As per a report by Motilal Oswal Financial Services, equity schemes have increased their oil and gas sector weight for the fourth successive month in February to reach a new high of 7.8%.

The main reason for this interest is valuation (one-year forward basis) of key PSU companies.

Note that valuations of PSU companies are at multi-year lows and the discount between prominent PSU stocks and the Nifty is as high as 50%.

Here's an excerpt from an article in The Economic Times...

• Several (PSU) stocks are trading at historic low valuations on the basis of price-to-earnings and price-to-book ratios. Fund managers believe improved outlook on both global and China growth, low oil prices and lower worries on India's fiscal situation can lead to a re-rating for the segment.

Some of the PSU stocks that have attracted huge buying from mutual funds in February include NTPC, Engineers India, GAIL, NALCO, and Coal India.

How these stocks perform remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

Also, speaking of mutual funds, it is worth noting that inflows into equity mutual funds stand at 25-month low.

Inflows into Equity Mutual Funds at 25-Month Low

Here's what Ankit Shah wrote about this in a recent edition of The 5 Minute WrapUp...

• You can see the net monthly inflows rising through 2016 and surging to unprecedented highs in 2017. But the inflows slowed in 2018. After October 2018, the inflows into equity mutual funds have been dropping every consecutive month. In fact, in February 2019, the net inflows into equities, including those linked to savings scheme funds, declined to Rs 5,122 crore. That's a 17% drop from January 2019, and a steep 69% plunge from a year ago.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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