India’s Sensex on course for sixth consecutive week of gains

India’s benchmark equity index is set for its sixth week of gains as a positive start to company earnings and a gradual pick-up in economic activity supported sentiment.

The S&P BSE Sensex has gained 2.5% this week, on course to complete its longest stretch of weekly gains since April 2019. On the day, the gauge fell 0.5% to 37,952.79 as of 10:10 a.m. Friday, while the NSE Nifty 50 Index fell by a similar magnitude. Both measures are trading above 70 on the relative strength index, a level that may signal the gauges are overbought.

“The exuberance in the market led by initial positive indicators is mostly factored in and the next course of action should be a correction,” said Umesh Mehta, head of research at Mumbai-based Samco Securities Ltd. “We see investors booking profit on these gains, as reading between the lines of earnings commentary, recovery may take longer.”

The nation’s stock market has seen brisk buying by retail investors, including many first-timers, as a prolonged lockdown reduced returns from bank deposits and most other asset classes. Meanwhile, foreign investors bought $294.7 million of local stocks this month through Tuesday.

Equity demand remains stable despite a rise in new infections. India has 1.24 million coronavirus cases, the third most in the world, according to data collected by Johns Hopkins University and Bloomberg News. Of those, 29,861 have died of the disease called Covid-19, while 782,607 have recovered from the virus.

Seven of 12 Nifty 50 companies that have reported results so far have either beaten or met analysts’ profit estimates, while two results weren’t comparable. ITC Ltd. and Asian Paints Ltd. are scheduled to announce results later in day.

The rupee weakened 0.3% to 74.97 per U.S. dollar, while the yield on the 10-year benchmark government bond was steady at 5.80%.