The Sensex ended last Friday at 16,741, up 2.93 per cent compared to its closing level the previous week. It is currently trading at a price to earnings ratio of 21.73. Foreign institutional investors made a net investment of Rs 5,315.8 crore in Indian equities last week.

According to Ashish Kapur, chief executive officer, Invest Shoppe India, “Liquidity is driving the markets up. A lot of money is available at low interest rates and there is pressure on fund managers abroad to perform. So money is finding its way into markets like India. Besides, the advanced tax numbers that came in this week were better than expected.”

As for sectoral performance, Auto and Metal were the best-performing sectors, rising 8.04 per cent and 7.84 per cent respectively. Oil and Gas and FMCG were the worst-performing sectors: the former declined (-) 1.06 percent while the latter rose by a meagre 0.96 per cent. Says Kapur: “Because of government initiatives such as the Sixth Pay Commission and NREGS, there is a lot of money in the hands of consumers which is being spent on automobiles. Besides, exports are expected to pick up. Maruti and Tata Motors are expected to export a great deal over the next two years. Metal has done well because internationally demand is robust and prices are going up.”

The Oil & Gas sector fell because it was expected that the government would take steps to reduce the subsidy burden on oil marketing companies, but that didn’t happen. The FMCG sector performed poorly because it is a defensive sector that doesn’t do well when the markets are rising rapidly. As for the future, Kapur says that as long as easy liquidity is available, the markets will rise. — S.K. Singh