Sensex advances for third straight day

The Indian stock indices closed higher on Friday despite a weak trend across world markets, as market players bet on the nation's strong macro-economic fundamentals even as FII flows are showing some signs of improvement. The NSE Nifty shut shop above the 5000 mark for the first time since August 17. Barring a brief scare in the afternoon, the undercurrent on the domestic bourses was positive throughout the session.



It may be recalled that the Indian financial markets were shut on Wednesday and Thursday on account of Ramzan Eid and Ganesh Chaturthi. Prior to that, the Indian stock indices had posted strong gains in the first two sessions of the week on the back of recovery in world equities and improvement in FII flows.

The upswing was led by Metals, Oil & Gas, Auto and Realty stocks. Even the Mid-Cap stocks saw some buying. However, the BSE Small-Cap index ended almost unchanged. The BSE IT and Power indexes were under pressure.

Finally, the BSE Sensex ended at 16,821, adding 144 points. It had earlier touched a day's high of 16,989 and a day's low of 16,688. It opened at 16,963. The NSE Nifty closed at 5,045, adding 45 points.

"The monsoon has picked up pace in the past few days but food inflation has crossed 10%, which is a cause for concern. The RBI is likely to hike policy rates by another 25 bps on Sept. 16. The crucial thing for the markets would be to see if the RBI signals an end to its tightening cycle or not.

India's GDP growth rate has moderated in the first quarter and might not pick up anytime soon given the high interest rate regime and slowdown in the global economy. Corporate investments have also slowed while the fiscal deficit situation is not inspiring any confidence. Having said that, growth is only moderating and not collapsing, making India one of the better-off markets in the world. In the short-term, the US monthly jobs data will be watched and analyzed carefully," says Amar Ambani, Head of Research, IIFL - India Private Clients.