Stock Indices Scale Fresh Highs, Traders Turn Cautious
Mumbai: The stock market hit record highs on Monday as the bullish momentum played out in the absence of adverse news flow. The undertone, however, was increasingly cautious with the Volatility Index (VIX) rising 5.6%, suggesting traders are uneasy with the current market levels. Benchmark indices closed at all-time highs with the BSE Sensex rising 108.94 points to close at 33,266.16. The Nifty gained 40.60 points to 10,363.65. Lupin gained 2.7%, ONGC rose 1.7% and Bharti Airtel advanced 1.6%. Mid- and smallc a p s h a r e s o u t p e r f o r med bluechips with their indices rising 1.1% and 1.2%, respectively, on Monday. “It is the momentum that is taking the markets higher these days rather than earnings where there is nothing to cheer about as of now,” said R Venkat Subramanian, chief executive, Infina Finance, a proprietary investment firm belonging to the Kotak Group.
“Thismaycontinuetillinvestors find that there are upside risks to the low interest rates they are using in their earning models,” said Subramanian. Global markets are watching the outcome of the US Federal Open Market Committee’s twoday meeting ending Thursday. While the American central bank is expected to keep the key policy rate unchanged, investors are watching the Fed’s comments on inflation and future interest rate hikes. Investors expect the US central bank to increase a key policy rate hike in December, the third in 2017, as inflationary pressures are showing signs of building up. The markets is also waiting to learn US President Donald Trump’s choice for the Fed chair.