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Indian markets began the week on a strong note as benchmark indices hit fresh record highs on Monday. Investor sentiment around domestic equities remained high even as China, the world’s second-largest economy, reported below-anticipated gross domestic product (GDP) for the September quarter, while elevated oil prices continued to stoke inflation fears.

The BSE Sensex rose 459.64 points or 0.75% to 61,765.59, while the Nifty gained 138.50 points or 0.76% to 18,477.05.

Stocks in other markets in the Asia-Pacific region were mostly lower with the Shanghai Composite in China falling 0.12%, while the Nikkei 225 in Japan shed 0.15%.

Vinod Nair, head of research, Geojit Financial Services, said, “The domestic market traded at record highs withstanding the weak trends in the global market due to disappointing Chinese GDP numbers and global inflationary pressure as a result of energy shortage. Chinese GDP grew by just 4.9% during the September quarter owing to lower-than-expected growth in industrial activity. However, the trend in the Indian market was bullish as PSU banks, metals, IT and energy stocks took charge of the rally."

However, India volatility index or India VIX surged 8.99% on Monday to end at 17.19, suggesting rise of anxiety and nervousness. Analysts believe that the markets will now turn focus on the September quarter earnings.

Ajit Mishra, analyst, Religare Broking Ltd, said market participants will be closely eyeing management commentaries for future growth outlook. “Apart from this, global cues would also be on their radar. We reiterate our bullish view on the market and suggest using intermediate dips to add quality stocks," he said.

Given the sharp increase in global commodity prices, particularly oil, concerns about India’s current account deficit (CAD) and its serviceability have resurfaced. Potential taper by the US Federal Reserve has only added to those jitters.

Analysts at BofA Securities believe that while foreign portfolio investment (FPI) inflows are expected to moderate given already-rich equity market valuations and expectation of policy normalization by the RBI, FDI inflows are expected to stay robust.

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