The government’s relaxation of foreign investment rules did not quite boost investor sentiment on Wednesday. The 30-share benchmark Sensex rose by 98 points, or 0.5%, to 19,949, as markets were in doubt on whether long-term inflows would materialise anytime soon.
The broader Nifty also rose 18 points, or 0.3%, to 5,973.30.
The markets were more keenly eyeing global news to indicate the broader mood for inflow of foreign institutional investor (FII) funds. Analysts said US Federal Reserve chairman Ben Bernanke’s testimony to the US Congress on the Fed’s easy money supply policy through bond purchases will ultimately decide the course of the markets.
The rupee, which would normally be expected to strengthen on expectations of foreign exchange inflows, also ended flat at 59.3 against the US dollar, as continued dollar demand from importers eroded early gains from the government’s decision to relax FDI rules.
In such a backdrop, FDI was not a top concern for the markets.
“None of the FDI announcements are likely to boost markets,” said Tirthankar Patnaik, chief economist, Religare Capital Markets. Consumer goods stocks, considered as safe plays in a volatile market, were the clear winners in the uncertain environment with HUL ending up 10% and ITC rising 2.3%. Both hit their all-time highs.
Telecom stocks, which gained initially on 100% FDI move, ended down 4.3% on profit-booking, said experts.