Bulls March! Markets up 9% as FIIs pump money

The rally in the month of March was primarily driven by FIIs, with the markets touching new highs and closing the month 9% higher.

Major news for the month

January IIP at 3.7% versus 1.6%

Inflation in February at 8.31% versus 8.23%

Per capita income during FY10 rises 14.5%

FDI down by 30% in February to $1.2 billion



Indian indices

It was a Bulls March!! After falling for two consecutive months, the domestic markets switched to positive mode in the month of March 2011 on revival of inflow from foreign institutional investors (FIIs). Markets were under pressure since the start of a New Year but post Budget, markets turned tables and witnessed rally which gained momentum in March. FIIs have been the biggest driver this month, pushing the key indices to new highs. The month of March has been a perfect one for India markets as they outperformed their global counterparts.

Index of industrial production (IIP) data for January 2011 came in at 3.7%, much higher than the Street estimates, which boosted the sentiments further. On the other hand, crude oil prices remained a major concern throughout the month owing to earthquake in Japan and concerns in the Middle East.

During the month, the key indices hit new highs, with the Sensex touching 19500 levels and the Nifty above the 5800. The Sensex swung 1783 points and the Nifty 524 points during the month. To close the month, the Sensex settled at 19445, higher by 1622 points or 9.1%, while the Nifty stood at 5834, up by 501 points or 9.38%.

Global indices

The global equities ended the month of March on a mixed note. The European markets fell in the range of 1.42 - 3.18%. The Sensex outperformed its peers, rising by 9%. Japanese Nikkei was the worst performer, declining by 8.18% as Japan’s disaster raised nuclear concerns.

Sectoral and stock screening

All the sectors closed in the positive zone. BSE Realty was the top performer, surging by 18% after a steep decline seen in February, followed by BSE Auto and BSE Bankex up over 12% each. Rest of the sectoral indices advanced in the range of 4.77-10.80%.

Going into 'A' group stocks, top three gainers - Apollo Tyres surged by 33.24%, Hindustan Oil Exploration rose by 26.56% and DLF gained by 26.01%. Top three losers - Areva T&D slid by 10.41%, Educomp dropped by 10.07% and Piramal Healthcare lost by 8.9%.

FII/MF activity

The FIIs played a prime role in lifting the markets higher. The FIIs have bought Indian stocks worth a net of Rs6,897.5 crore in March as compared to net sell of Rs4,585.8 crore seen in February. The local investors continued its buying trend in March as they purchased Indian shares worth a net of Rs22 crore as against net buy of Rs1,436.4 crore seen in February.



Next cue from Q4 quarterly results
Climbing the wall of worries (such as high crude oil prices, inflation and natural disaster in Japan), the Sensex recovered smartly in the past few trading sessions. The recovery is driven by reversal of FII flows back into India. The sustenance of these FII flows would be influenced by the forthcoming quarterly results. Analysts have already revised downward FY2012 earning estimates in the past few months and are expected to further moderate growth expectations in the light of the margin pressure arising out of the rising input cost and energy prices (coal and crude oil). Thus, we expect the markets to try and consolidate around the current levels with stock specific volatility depending upon quarterly results and the revision in the growth outlook.