Sensex, Nifty record new highs on strong inflows
Steady flow of funds has helped propel markets to new records as domestic and foreign investors bet on India’s structural reforms story
MUMBAI: India’s benchmark equity indices surged to new record closes on Friday, reflecting investor optimism over progress in economic reforms as the National Democratic Alliance (NDA) government enters its fourth year.
Backed by strong fund inflows, the 30-share BSE Sensex crossed the psychologically important 31,000-point mark for the first time. The National Stock Exchange’s broader 50-share Nifty also rose to a lifetime high.
The Sensex rose 278.18 points, or 0.9%, to end the day at 31,028.21 points and the Nifty climbed 85.35 points, or 0.9%, to 9,595.10.
Earlier in the day, the Sensex climbed as much as 324.04 points, or 1.05%, to 31,074.07 and the Nifty rose as much as 95.15 points, or 1%, to 9,604.90.
A continuous inflow of domestic and foreign institutional investor (FII) funds has helped propel stock prices. Investors are betting on India’s structural reforms story and a likely rebound in economic and corporate earnings growth.
Investors have applauded reforms such as the goods and services tax (GST) and greeted the Bharatiya Janata Party’s win in Uttar Pradesh assembly elections in March as reinforcing political stability.
“Steady domestic flows, along with FII inflows are driving the market. The corporate earnings numbers, which are broadly in line, are supporting the sentiment,” said Rikesh Parikh, vicepresident of equities at Motilal Oswal Financial Services Ltd.
“Market has been upbeat on the reforms process too. GST, which is likely to be implemented soon, is a key reform. With GST, one will not have to deal with multiple agencies and this will enhance the ease of doing business,” said Parikh.
FIIs have invested a net of $7.81 billion in Indian shares so far in 2017, and domestic institutional investors (DIIs) have parked a net of ₹12,587.18 crore in the asset class in the same period. Foreign investors see the rally continuing in the days to come.“I would expect Indian equities to perform rather well in the coming quarters,”said Maarten-Jan Bakkum, senior strategist (emerging markets), NN Investment Partners, based in the Netherlands.
Prospects for domestic demand growth remain good, which is important given the expected slowdown in Chinese growth and India’s relative resilience to that, said Bakkum.
“Also, with Indian inflation and interest rates coming down, domestic investment flows into equities should remain strong,” added Bakkum .
In the year to date, Nifty has been the best performer in Asia and among key emerging markets, logging a gain of 17.22%.
“I am bullish on Indian markets, in fact, it is the best bet in the emerging markets equities, particularly the small-cap space,” said Shankar Sharma, vice-chairman and joint managing director of First Global Securities Pvt. Ltd.
In Friday’s trading, all sectoral indices, except the BSE healthcare index, closed higher. BSE Auto, Bankex and BSE FMCG (fast-moving consumer goods, or packaged consumer products) also recorded new highs in intra-day trading.
HDFC Bank Ltd, Maruti Suzuki India Ltd, cigarettes and consumer goods maker ITC Ltd touched new lifetime highs.