SENSEX, NIFTY HIT RECORDS ON POSITIVE SENTIMENT

MUMBAI: Indian stock markets rallied to record highs on Friday with the Nifty crossing the 10,500 mark for the first time, helped by gains in technology stocks such as Infosys Ltd and Tata Consultancy Services Ltd. The Sensex rose above the 34000-mark before closing slightly lower at 33,940.30, up 0.55%, while the broader 50-share Nifty closed at 10,493, up 0.50%. The BSE Midcap and BSE Smallcap indices also hit new highs during the day.

“It is not surprising that the markets have touched new highs. They are running up on positive sentiment driven by hopes of revival in quarterly earnings and a favourable Budget,” said Gaurang Shah, vice-president at Geojit Financial Services Ltd. They are expected to hit multiple highs in the year ahead, he added.

Most analysts believe that the markets will continue their firm rally in 2018. Corporate earnings are likely to revive strongly owning to a low base and expected recovery in growth, said Hemang Jani, senior vice-president, advisory, at brokerage Sharekhan, owned by BNP Paribas SA.

“Earnings of Sensex companies are expected to grow, aided by strong performance of automobiles, banking and energy sectors. Some of the consumer firms have reported encouraging Q2 numbers, while management commentary indicates early signs of domestic demand revival. We don’t expect a large and significant scope for downgrade in the consensus estimates for FY18 and FY19,” he added.

Lack of earnings growth as companies struggled to adjust after demonetisation and implementation of GST this year have raised concerns about the expensive valuations of markets.

The markets have seen a sharp rally this year with the benchmark indices rising 27-28% in 2017, while the MSCI Emerging Markets index gained 23.88% and MSCI World rose 12.96%.