Sensex ends at near 5-week high on FII buying

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The BSE Sensex rose for a fourth straight session on Wednesday to close at its highest in more than a month as blue chips such as ITC Ltd rose on heavy buying by foreign investors despite expectations of volatility due to derivatives expiry.

Overseas investors have been net buyers of cash shares in each of the previous nine sessions, with inflows totalling $533.2 million, exchange and regulatory data showed, calming worries about the US Federal Reserve’s stimulus tapering and a slowdown in China.

Also boosting sentiment was foreign buying of index futures and options on Tuesday, worth Rs. 2,151 crore, a rare event one day ahead of the expiry of derivative contracts.

Financial markets in India will remain closed on Thursday for a local holiday.

Traders will continue to monitor moves in other regional markets for near-term direction, ahead of December-quarter economic growth data due to be released after market close on Friday.

“FIIs flows are driving the market and may even overshadow GDP data. We are positive about the market for the month of March and are seeing a pre-election rally taking shape,” said Vinod Nair, head of fundamental research at Geojit BNP Paribas Financial Services.

India’s economic growth likely slowed to a near decade-low of 4.9 per cent at the end of last year as high interest rates hit factory activity, according to economists polled who don’t expect a pickup in investment before elections in May.

The benchmark BSE Sensex rose 0.65 per cent, or 134.52 points, to end at 20,986.99.

The broader Nifty rose 0.62 per cent, or 38.75 points, to end at 6,238.80. It closed above the psychologically important 6,200 level for the second day.

Both the indexes marked their highest close since January 24 for a third consecutive day.

India’s National Stock Exchange on Wednesday launched trading of futures tied to its VIX volatility index, known as the “fear gauge,” providing a key hedging tool against uncertainty ahead of general elections and weaker global market sentiment.

Trading was active with Rs. 325 crore worth of turnover, the NSE website showed.

India’s regional parties met on Tuesday to declare a political alternative to the two main national parties, the ruling Congress and the main opposition BJP, ahead of national elections due by May.

Cigarette-maker ITC rose 2.1 per cent, while Sun Pharmaceutical Industries gained 1.5 per cent.

Among other blue chip stocks, HDFC Bank rose 0.9 per cent, while Mahindra and Mahindra ended 2.2 per cent higher.