India's stock markets extended gains and hit new record high on Friday, driven by strong buying across select bluechip stocks like State Bank of India, Tata Motors, Larsen and Toubro, and ONGC. US President Donald Trump picking Jerome Powell as the new Federal Reserve chairperson also weighed on sentiments as his appointment signals there will be a continuation of the cautious monetary policy stance adopted by outgoing chief Janet Yellen.
The BSE Sensex hit a a fresh life high of 33,733.71 before closing at 33,685.56, up by 112 points or 0.3 per cent. The broader NSE Nifty50 index rose 29 points or 0.3 per cent to end at 10,452.50.
Over the week, the Sensex gained 1.6 per cent, while the Nifty rose 1.3 per cent.
Continued strong domestic mutual fund flows and foreign institutional investors also buying into equities again from October, has primarily driven the rally in India's equity markets.
FIIs who sold around Rs 24,000 crore worth equity over August and September, have re-emerged as net buyers, investing Rs 3,055 crore in October and Rs 987 crore in the first three days of November, taking their total investments so far in 2017 to Rs 38,394 crore.
Sentiments particularly improved after the government unveiled a huge Rs 2.11 lakh crore bank recapitalisation plan last week, apart from a huge infrastructure push.
But, corporate earnings so far this quarter have remained mixed, worrying some analysts.
"The torrent of liquidity is simply unabating. The party will continue till the inflows continue. However, the earnings growth remains tepid and unless earnings recover, liquidity may not be alone able to drive markets for long," feels Ajay Bodke, CEO and chief portfolio manager at Prabhudas Lilladher.
SBI, the country's largest lender, was the biggest gainer on November 3; the stock surged 3.2 per cent after it cut lending rates. The bank is also expected get a sizeable chunk of the government's PSB recapitalisation plan.
Among other major gainers, Tata Motors rose 3 per cent, while ONGC, L&T and Axis Bank gained about 2 per cent.
Coal India, Sun Pharma and Power Grid were among the losers; all dropping around 2 per cent.
Economic data this week has been mixed. The core sector growth hit a six-month high of 5.2 per cent in September. Services activity also grew for the second straight month in October. However, India's manufacturing PMI (purchasing managers index) declined to 50.3 in October from 51.2 in September as the Goods and Services Tax and price hikes that have followed in some segments, weighed.
Looking ahead in the coming week, investors will continue to track corporate earnings. Several major auto companies like Ashok Leyland, Bharat Forge, Tata Motors and Mahindra & Mahindra will report quarterly earnings in the coming week. Nestle India, SBI and Pfizer are among other key companies that will announce their results as well.
Bodke of PL expects the consumer focused sectors like auto, non-banking finance companies, retail, to continue to do well, while the performance of metal firms has also picked up year-on-year, he pointed.
