SENSEX SCALES MOUNT 30K
STRONG MACRO, ROBUST FLOWS AND POSITIVE GLOBAL CUES SPARK RALLY EXPERTS CAUTIOUSLY OPTIMISTIC, FOURTH QUARTER EARNINGS TO DETERMINE FUTURE
The BSE’s bellwether index, Sensex, scaled a record high on Wednesday, closing at 30,133 points — 190 points or 0.6 per cent higher than the previous day. The Sensex has crossed the 30,000-point twice in intra-day trade previously — in March 2015 and in April 2017. This is the first time it closed above 30,000.
The National Stock Exchange’s Nifty50, too, posted a record high for a consecutive day, gaining 45.2 points or 0.5 per cent on Wednesday to close at 9,315.8. The Sensex has rallied 13.2 per cent in 2017 so far. A stronger rupee has helped India register impressive gains in dollar terms as well. The Sensex is up 20 per cent in dollar terms, outperforming all major global indices.
“Indian equities have been riding high in the recent past due to positive environment both on domestic and global fronts. While the institutional flows have been strong, even the appetite of retail investors has improved. Market fundamentals are robust and the medium- to long-term expectations are extremely positive. India will be the best bet among emerging markets for the next few years,” said Arindam Chanda, head, IIFL Broking.
While the outlook remains positive, experts warn that the current rally is not yet supported by earnings growth. It has been subdued for the past three years because of a fall in commodity prices and increase in credit cost for the banking sector.
A revival in earnings for the fourth quarter results of FY17 would be crucial in determining market direction over the near term.
“Earnings play a crucial role in sealing the fate of markets. While the markets have already shot up anticipating a revival in earnings, if the expectations are not realised, the markets could lose support,” said U R Bhat, managing director, Dalton Capital Advisors India.
The current rally has been supported by strong flows from foreign and domestic institutions. Foreign portfolio investors (FPIs) have purchased equities worth ~42,886 crore till date this year, while domestic mutual funds have shopped shares worth ~17,800 crore, data showed.
ITC, which went up 3.3 per cent, was the best performing stock among the Sensex companies on Wednesday. Shares of Mahindra & Mahindra and Housing Development Finance Corporation rallied 3.3 per cent and 2.3 per cent, respectively.
The BSE 500, which is a gauge of broader markets also closed at an all-time high, as did the BSE 100 and BSE 200 indices. RELATED REPORTS ON II, 2