Sensex, Nifty hit new record highs
Mumbai: India’s benchmark Sensex and Nifty indices gained nearly 1% each to scale fresh record highs after India’s rank in the World Bank’s ease of doing business survey improved to the 100th position from 130th earlier.
In morning trade, the 30-share Sensex climbed 1%, or 339 points, to reach 33,552.12. The National Stock Exchange’s 50-share Nifty gained 0.91%, or 94.25 points, at 10,430.75 points.
The massive 30 places jump was due to reforms put in place by the Union and state governments over the past four years which have started delivering results.
Sustained reforms to improve the business environment over the last four years is the major factor which helped India to improve rankings, the World Bank report said.
“The endorsement by World Bank to the government initiative on reforms is testimony to the fact on improving business environment in the country. The same is seen reflecting on the benchmark indices,” said Ajay Kejriwal, president of Choice Broking.
Earlier, Goldman Sachs Group Inc. and Citigroup Inc. raised their Sensex targets citing the bank recapitalisation programme, infrastructure push and continued inflow of domestic savings into equities. They believe these factors more than offset concerns on valuation and poor earnings growth and are sufficient to propel the Sensex and Nifty to newer highs in 2018.
“The bank recapitalisation package unveiled last week and the rise in India’s ranking in the World Bank Ease of Doing Business survey announced today have bolstered Mr Modi’s reform credentials. But the bigger picture remains that progress on tackling the major constraints to India’s economic growth has been disappointing since Mr Modi became prime minister. This has been reflected in a deterioration in consensus expectations of India’s long-run growth potential. Despite recent news, we think these more downbeat assessments are still justified,” said a Capital Economics report.
Analysts believe that so far in the September quarter, companies have announced earnings in line with expectations which also helped the markets. Of the 27 Nifty companies that have announced results so far, 18 have either met or exceeded analyst expectations, as per data compiled by Bloomberg.
Investors are awaiting the start of central bank meetings and the nomination of the next US Federal Reserve chair. According to a Bloomberg report, rates are widely seen staying unchanged and investors appear to be more focused on the nomination of the next Fed chair, which is expected on Thursday.
Among the gainers, Bharati Airtel Ltd surged 3.3%, while Axis Bank Ltd rose 2.2%. State Bank of India rose 2.1% after it cut lending rates by 25 basis across tenors.
All the sectoral indices were trading higher. BSE Telecom was the top gainer up 2.2%, followed by BSE Realty and Bankex Indices which rose 2.1% and 1.7%, respectively.