After a three-day hiatus, FIIs became net buyers on Monday at Rs 688 crore.
The Sensex surged above 20,000 for the first time on Monday in tune with other Asian markets, as traders priced in another rate cut by the US Federal Reserve this week.
Expectations of a status quo in the Reserve Bank of India’s monetary policy stance
also contributed to the rally, which saw the index ending up 3.82 per cent, or 734.50 points, at 19,977.97, just off a high of 20,024.87 hit in late trade.
After a three-day hiatus, foreign institutional investors (FIIs) became net buyers on Monday at Rs 688 crore. The fact that there is no pressure on them to unwind their holdings through participatory notes was the buying trigger on Monday.
Analysts said the new Sebi norms on issuance of P-notes had been quite accommodative. As most P-notes linked to equities and issued by sub-accounts will be regularised as soon as they register as FIIs, foreign investors are under no pressure to unwind them even after 18 months.
The index has now risen 27.5 per cent since the US rate cut and almost 43 per cent — or almost 6,000 points — since its weakest close during the subprime crisis in August. The record-setting run has been driven by foreign funds, which have bought a net $17 billion of shares this year up to Friday.
The broader 50-share NSE index rose 3.57 per cent to 5,905.90 points, after hitting a record high of 5,922.50 during trade. In the broader market 1,551 gainers led 1,186 losers in a total volume of 470 million shares.
