This is a discussion on Indian Sensex within the Investment forums, part of the Financial Services category; The slow progress of crucial monsoon rains all across the country and the absence of any major positive buying trigger ...
The slow progress of crucial monsoon rains all across the country and the absence of any major positive buying trigger are likely to result in volatile trade on the Indian bourses in the coming sessions.
Analysts say while the investors' sentiment is positive on strong foreign fund inflows, the shares of consumer goods makers and automobile firms may come under selling pressure if monsoon continues to elude a large part of the country.
The stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed Friday at 6,781.99, representing a gain of 28.99 points or 0.43 percent over its previous week's close.
The market closed in the positive zone for the sixth consecutive week as institutional investors picked up new as well as old economy shares at attractively lower levels.
The market index is trading at 2.5 percent lower from its all time high of 6,954.86 touched on March 9, 2005.
The June-September monsoon rains are very crucial for the Indian agricultural sector, which accounts for one-fourth of the country's total economic output and provides employment to nearly 70 percent of the country's population.
India's economy grew by 6.9 percent in the fiscal year ended March 31, 2005, on top of a higher increase of 8.5 percent in the previous year on increased agriculture production.
"Monsoon will continue to be the buzzword in the trading ring in the week ahead. It's the only factor that can affect the trading pattern on the bourses in the near term," said Deepak Shah, an analyst with brokerage firm Pranav Securities.
"Some of the fund operators have expanded their portfolios in the past few sessions on hopes of normal rainfall. If this doesn't happen, then they will definitely press the sell button," added Shah.
Dealers said sustained overseas fund inflows in the coming sessions might cushion a sharp plunge in the valuations of blue-chip equities in the trading week beginning Monday.
Foreign institutional investments, which act as the backbone of the liquidity-starved Indian share market, have invested $393.30 million in the domestic equities so far in the current month.
This compares with a sell-off of $261.30 million in May and $149.50 million in April.
"The foreign fund inflow is showing clear signs of picking up after two consecutive negative months. This certainly comes as a major boost for the market sentiment," said a broker with the Bombay Stock Exchange.
In the intra-week trade ended Friday, the stock market opened for the week Monday on a positive note as investors picked up stocks of heavyweight companies on hopes of good monsoon rains.
The bull-run in the stock market continued unabated for the next two consecutive sessions on robust foreign funds inflows and hopes of normal monsoon rains.
Buying in Reliance group stocks was also fuelled by reports that the broad framework to settle the row between Reliance Industries chairman Mukesh Ambani and his younger brother Anil Ambani, vice chairman, would be formalised soon.
The market, however, failed to maintain its gaining momentum for long and the key index finished lower in the last two sessions of the trading week as cautious investors rushed to pocket gains in equities at sharply higher levels.