New Delhi: Indian stock markets rose sharply on Monday with both the key indices, Sensex and Nifty, rising nearly one per cent at the closing session on Monday on the back of positive GDP data, sustain capital inflows and positive sentiment among domestic and foreign investors.
The 30-share Sensex ended up 229 points at 26,868 after hitting a record high of 26,900 and the 50-share Nifty ended up 73 points at 8,028 after touching a record high of 8,035. The Bank Nifty also ended above 16,000 for the first time.
All sectoral indices except FMCG, ended in the green led by Capital Goods, Metal, Realty, Power and Bankex among others.
From the 7000 level, Nifty has took 78 trading sessions since May 12, till date to surpass the 8,000 mark led by autos, pharma, information technology (IT), metal, banks and realty sectors.
Seventy stocks, including 8K Miles, Adi Finechem, Arvind, ICICI Bank, IndusInd Bank and Tech Mahindra, have registered their life-time peaks and 135 stocks have touched their new 52-week highs on the Bombay Stock Exchange.
The market rally was on the back of positive cues emerging from a healthy GDP data. India's GDP grew at 5.7 per cent in the first quarter of 2014-15, exceeding expectations. The rally also got a boost by sustained foreign institutional investor (FII) flows and participation of domestic mutual funds, which have bought close to Rs 60,000 crore since May 9. Better-than-expected corporate earnings for the quarter ended June also boosted the sentiment.
According to Global investment bank, BofA-ML, corporate earnings and markets are set to double in the next 4 years.
Experts believe that there is a strong 'Modi factor' for the current surge in the market. There is a feeling that National Democratic Alliance (NDA) is pro-business, and therefore everyone who have stalled their investment spends are now showing confidence in the system.
Given the thrust on banking, capital goods, construction, infrastructure and power, these formerly laggard stocks are now seen improving, giving rise to the term 'Modi stocks'. But the data suggests that the focus has now moved to companies that are fundamentally sound and continued to perform well in the June quarter.
The new NDA government, under Modi, after assuming office on May 26 has taken certain steps to increase foreign direct investment (FDI) into the country. In his interaction with Japanese media, Modi said that with the right signal of policy stability and genuineness of intent by the Government, FDI influx will happen on its own, as India is an excellent investment destination.
The government has allowed 100 percent foreign direct investment (FDI) in several areas in the railways sector. It notified that the FDI limit in the defence sector would be increased to 49 percent from the current 26 percent, through the approval route. At the same time it has cleared the FDI limit in the insurance sector to be increased to 49 percent from the current 26 per cent. The land acquisition laws put in place by the Congress-led UPA government are set to undergo a transformation.
However, these are not big bang reforms exactly but minor tinkering at best. Still such reforms are instrumental in dispelling the negative mood of pessimism that had gripped investors during UPA II. Certainly, things are slowly picking up but for the economy to bounce back completely, it has to sustainable. Still, the business confidence remains high that the Modi-led government will deliver on reform.
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