Sensex closes above 36,000 points, Nifty crosses 11,000mark
IMF’s projection of robust economic growth, signs of recovery in corporate earnings fuel rally
MUMBAI: Lifted by a tide of liquidity, benchmark stock indices rose above key psychological levels to new lifetime records on Tuesday, with the Sensex taking just five days to jump from 35,000 points to 36,000.
For the first time ever, the BSE Sensex closed above the 36,000-point level and the National Stock Exchange’s Nifty breached the 11,000 mark.
Indian markets have joined a global rally in equities spurred by investors’ confidence of synchronised world economic growth and benign inflation.
With the International Monetary Fund forecasting that India is set to regain its position as the fastest growing major economy in the world and early signs of a recovery in corporate earnings, Indian markets are likely to be beneficiaries of continued inflows of foreign investments.
“Indian markets are going up because world markets are going up. As long as world markets in general are performing, Indian markets will go up (although they are underperforming many of these markets). These days Indian markets are followers and not leaders. We hope that as Indian earnings recover, we can lead this global rally,” said Samir Arora, founder and fund manager of Helios Capital Management Pte. Ltd.
The Sensex closed at 36,139.98, up 341.97 points, or 0.96%. This takes its gains for the year to 6.12%.
That is a sharp increase in just three weeks, thanks to foreign institutional investors buying $1.2 billion of Indian stocks. Some other markets have done better. Hong Kong has gained 8.27% and Brazil 6.9% in the same period.
To be sure, risks remain. The Sensex is now trading at 19.3 times its expected earnings over the next 12 months, expensive compared to most big world markets. If corporate earnings disappoint, investors could take a pause.
“The market has been on an uptrend given the expected improvement in the corporate earnings coupled with stable macro (economic data). However, at current levels, the market seems to have factored in the possible turnaround in earnings,” said S Naren, executive director and chief investment officer at ICICI Prudential Asset Management Co Ltd.