India's benchmark stock indices scaled new peaks on Friday, rising for the fourth consecutive week, tracking gains across global markets as a pickup in European factory output and upbeat US manufacturing data boosted investor sentiments.
The BSE Sensex rose 136 points or 0.4 per cent to close at 31,273.29. It crossed 31,300 mark for the first time ever, hitting an intra-day high of 31,332.56 during the session.
The NSE Nifty 50 index gained 37 points or 0.4 per cent to close at 9,653.50. For the week, both the Sensex gained 0.8 per cent and the NSE Nifty was up 0.6 per cent.
Select auto stocks accelerated on Friday, following good wholesale numbers for month of May. Hero MotoCorp rose 2.8 per cent, Ashok Leyland was up 1.7 per cent and TVS Motor gained 1.2 per cent.
A slight recovery in corporate earnings in the fourth quarter is one of the key reasons behind the markets continuing to rise, say analysts.
“Earnings have been slightly better-than-expected, despite demonetisation. Domestic liquidity also remains good even now. These two things are driving the markets,” said Rakesh Tarway, head of research at Reliance Securities.
A good monsoon and lower inflation expectations, which should drive down interest rates, is further seen aiding earnings recovery.
“The monsoon forecast has been good. Inflation is seen coming lower than what people were expecting earlier, which will lead to further decline in interest rates...The positives right now are outweighing the negatives,” added Tarway.
On Friday, other than auto stocks, major Sensex gainers included Cipla, which rose 2.6 per cent, Adani Ports was up 2.1 per cent, and Wipro, HDFC and Bharti Airtel gained about 2 per cent.
In the coming week, the market will be closely eyeing moments at RBI. The central bank, which has already changed its tone from accommodating to neutral, is expected to keep key interest rates on hold in its bi-monthly monetary policy announcement on June 7, while it may continue to mop-up excess liquidity from the market, as it had done in the previous policy.
The market mood will also remain slightly nervous ahead of the implementation of the Goods and Services Tax from July 1.
Analysts say, there will be some disruption for 1-2 quarters post the GST implementation.
“We are advising investors to buy FMCG stocks, auto stocks, but remain cautious on public sector banks,” said Tarway.
Meanwhile, world stocks also hit record highs on Friday on the back of upbeat economic data. A survey on Thursday showed manufacturing across the euro zone rose at the fastest rate in more than six years, which eased investors nerves.
In Asia, Japan's Nikkei closed over 300 points or 1.6 per cent higher and Hong Kong's Hang Seng was also up over 82 points or 0.3 per cent. MSCI's broad index of Asia-Pacific shares outside Japan gained 0.6 per cent.
Key European markets like the London's FTSE100, German Dax and France's CAC40 were trading 0.5 per cent to 1.0 per cent higher.
