Strong inflows from foreign institutional investors and higher than estimated growth rate in China, took both the benchmark indices to their record peaks on Tuesday. The 30 share index BSE Sensex closed 523 points higher at 28,785 while the NSE Nifty was up 145 points at 8,696 as the positive momentum from Reserve Bank of India rate cut continued to help markets rally for the fourth day.
According to analysts, strong buying by foreign investors, also contributed to the upsurge, that have pumped in a net of Rs3,200 crore in the last three trading sessions. Foreign institutional investors (FIIs) are returning back after the International Monetary Fund growth forecast on India. It sees India as the world’s fastest growing major economy at 6.5 per cent in FY17. It has cut the 2015 global growth forecast to 3.5 per cent from 3.8 per cent.
According to Nomura, “The improvement in India’s macro environment over the past year is durable and will improve further. The lagged effect of the much-needed complete overhaul of the political economy is a significant tailwind.” The brokerage expects the Sensex to rise by 20 per cent to 33,500 in 2015.
Market experts believe that the next trigger for the rally is the Budget next month as investors are hoping that the Narendra Modi-led government will announce some strong reforms measures to boost the economy. The visit of US President next week could also see some announcements which could have long term positive impacts on the Indian economy.
Banking stocks attracted strong buying action today, with Bank Nifty index rising 1.86 per cent. Among banking and financial services stocks, HDFC surged nearly 6 per cent while Axis Bank rose nearly over 4 per cent. ICICI Bank, HDFC Bank and SBI gained between 1.5 per cent and 2 per cent.
Metal stocks outperformed on Tuesday with the BSE Metal index surging over 3 per cent. Metal stocks advanced after China reported its economy had not slowed as much as many had feared. Sesa Sterlite surged 5.7 per cent while Tata Steel rose 4.5 per cent.
Along with the benchmark indices, bank Nifty and mid-cap indices also closed at record peaks. According to experts, for mid-caps, they see better potential upside of 22 percent, with a BSE Mid-Cap target of 12,950 for the end of 2015.
Among the laggards were GAIl, Tata Power,Dr Reddy’s labs and Maruti Suzuki. While stock markets went up, rupee gained 2 paise against the dollar at 61.69 with banks and exporters selling the US currency amid sustained capital inflows in view of strong equity markets, extending gains for the forth day in succession.
The rupee resumed lower at 61.82 per dollar as against the yesterday’s closing level of 61.71 per dollar at the Interbank Foreign Exchange (Forex) Market on initial dollar demand. The local currency however staged a comeback with banks and exporters selling dollar on hopes of more foreign capital inflows in view of strong equity market.
The rupee finally end the day’s trade at 61.69, showing a marginal gain of two paise from its previous close. The rupee has gained by 49 paise or 0.79 per cent in four days.Meanwhile, the benchmark BSE Sensex rose by 522.66 points or 1.85 per cent to all-time closing high of 28,784.67.
The dollar index was up by 0.19 pct against a basket of six major global rivals.The benchmark six-month rupee premium payable in June eased to 198-200 paise from 199.5-201.5 paise yesterday, while forward contracts maturing in December finished stable at 396-398 paise.