Markets report biggest monthly gain in 2 years; IT and FMCG stocks jump

India was the second best performer in April among major global markets. Photo:
Defying spiraling crude oil prices and weakness in the rupee, the benchmark stock indices ended April with a gain of nearly seven per cent, their best monthly performance since March 2016. 

In the preceding two months, the market had fallen a little over 10 per cent amid a jump in US bond yields, flaring of global trade tensions and domestic worries such as the banking fraud and increase in political uncertainty ahead of the 2019 general election. 

The rebound has come on the back of a favourable monsoon outlook, gains in information technology (IT) stocks — the second biggest sectoral weight in the benchmark indices, after banking — and improvement in the earnings outlook.  More important, investor sentiment was also buoyed by positive global cues, thanks to cooling of geopolitical tensions and optimism that monetary conditions will continue to remain favourable, despite the US Federal Reserve moving along the path of interest rate tightening.

On the BSE, the benchmark Sensex gained nearly 0.6 per cent on Monday, ending the month with a 6.7 per cent gain. The latest gains were led by Housing Development Finance Corporation, which posted strong numbers. Followed by Tata Consultancy Services, whose shares have been making new highs after it posted encouraging results on April 21. The country’s highest valued company ended the month with a sharp 24 per cent gain. YES Bank and Mahindra & Mahindra were other major Sensex gainers, adding 18 per cent each.

Only three Sensex stocks — State Bank of India (SBI), Wipro and Maruti Suzuki — ended the month with negative returns. While Wipro and Maruti Suzuki missed on earnings expectations, negative sentiment towards public sector banks continued to weigh on SBI. Among the BSE sectoral gauges, the IT, fast moving consumer goods and realty indices gained the most during the month. While the telecom, oil & gas and public sector undertaking indices ended with losses. Markets will remain closed tomorrow on account of May Day.    

The IT pack was buoyed by gains in TCS, while the FMCG stocks were boosted by a healthy monsoon forecast and hope of higher rural spending in a packed election calendar. 

Interestingly, the sharp gain in the market was led by strong buying from mutual funds (MFs), even as foreign institutional investors (FIIs) took money off the table. MFs pumped nearly Rs 90 billion into stocks, while FIIs pulled out Rs 53 bn. 

India was the second best performer in April among major global markets, after the UK, which gained 6.9 per cent. France, Singapore and South Africa were other major gainers. However, in dollar terms, India’s ranking slips to fifth, due to a 2.4 per cent decline in the rupee against the dollar. The rupee has been under pressure amid surging crude oil prices. Brent crude prices rose six per cent in April, taking their two-month gain to nearly 15 per cent.

Experts see rising crude oil prices and weakening of the rupee as a major headwind for the domestic market. However, April saw the markets surprising many in shrugging off these two concerns. The up-move was so strong that the benchmark indices ended with losses on only four of the 21 trading sessions in the month. Also, the rally in the market was broad-based, with the BSE Midcap index gaining 6.6 per cent and the BSE Smallcap index gaining 8.3 per cent.