Strong recovery in Rupee, heavy FII inflows result in gains during September 2013 - ZENMoney

During the month of September, positive global and domestic data, a strong recovery in the rupee and heavy FII inflows resulted in higher gains. However, hike in lending rates by RBI and fears of further rate hikes capped the rally in the markets. By the end of month, Sensex and Nifty were up by 760.05 and 263.50 points to close at 19379.77 and 5735.30 respectively.

Domestic indices started the month on a positive note following firm global cues and monthly hike in diesel and petrol prices. Higher crude prices on the back of possible US-Syria crisis and fears over possible downgrade of India by S&P kept the upside of local bourses in check. However, sentiment remained upbeat with the new central bank governor, in his maiden speech, unveiling fresh measures to shore up the rupee and aid overseas inflows. RBI raising current overseas borrowing limit of the unimpaired tier-I capital and improved gross direct tax collection supported the rally. Steep recovery in the rupee against dollar, strong exports data in August, improved domestic car sales data and narrow August trade deficit further supported the uptrend of the market. Thereafter, markets recorded some profit booking and witnessed volatility ahead of FOMC meet. However, fall in crude prices on easing concerns of possible US-Syria war and better than expected IIP data supported the market at lower levels.

Markets witnessed a strong rally on the back of US continuing it's Quantitative Easing (QE) program. However, RBI's move of hiking key policy rates by 25 basis points and fears of further rate hikes over concerns on rising inflation dampened the market sentiment. Also, lowering of India's growth forecast from major global rating agencies Fitch and Moody on account of deteriorating macro-economic indicators kept the markets under pressure. On the other hand, government deferring plans for a one-time diesel price hike and concerns over widening CAD due to increased gold imports induced more weakness into the markets.

FIIs' turned net buyers during the month on the back of improving economic data with policy reforms and recovery witnessed in the rupee. During the month, FIIs' net bought equities worth Rs 12632.90 Cr. Mutual funds continued to withdraw from equities at a higher pace, and for the month they net sold equities worth Rs 2800.30 Cr.

On the sectoral front, Power sector was the major gainer of the month followed by CG, FMCG, Auto, Metal, Banking, HC and CD sectors. On the other hand, IT and Realty sectors remained as losers of the month.

Source : Equity Bulls

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