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MUMBAI : Indian stocks scaled new heights on Tuesday, powered by fresh data that indicated a robust economic rebound.

The National Stock Exchange’s Nifty index breached the 16,000-mark for the first time on Tuesday. The 50-share gauge rose 1.55% to 16,130.75. The BSE Sensex gained 1.65% to 53,823.36. Both indices last hit record highs on 16 July.

Investors cheered signs of the economy rebounding faster than expected.

Soaring high
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Soaring high

Economic indicators such as goods and services tax (GST) collection, automobile sales, purchasing managers’ index (PMI) and the monsoon rainfall trend for July point to a swift economic recovery after the pandemic’s deadly second wave waned in June.

The data indicates a strong rebound, said Vinod Nair, head of research at Geojit Financial Services.

“All major domestic data favour a strong recovery. This has added to the euphoria in the domestic market, along with a drop in global risk after the accommodative monetary and fiscal policy announcements," Nair said, adding that a similar accommodative policy is expected to be announced after the Reserve Bank of India’s monetary policy committee (MPC) meeting ends later this week.

Manufacturing activity data posted the strongest growth in three months as states eased localized restrictions.

Data released by analytics firm IHS Markit on Monday showed purchasing managers’ index for the manufacturing sector rose to 55.3 in July from 48.1 in June.

Investors are likely to sustain the stocks rally, analysts said.

“With accommodative financial conditions worldwide, we expect the mega rally in risk assets to continue," Amar Ambani, senior president and research head at Yes Securities, said, adding that he expects the Nifty index at 18,000 by December.

The Reserve Bank is also widely expected to keep interest rates unchanged to boost growth.

“The central bank is most likely to maintain a status quo on rates, being mindful of growth and wait for more data points on the inflation front," said Lakshmi Iyer, chief investment officer-debt, and head-products, Kotak Mutual Fund.

Domestic institutional investors have pumped in 1,505 crore into equities so far in August after a net inflow of 18,393.92 crore in July. However, foreign institutional investors (FIIs) continue to sell Indian shares. This month, FIIs were net sellers of equities worth $199.96 million, following an outflow of $1.70 billion in the previous month.

Meanwhile, stocks in major Asia-Pacific markets declined. Hong Kong’s broader Hang Seng index fell 0.16%, while the mainland’s Shanghai Composite Index declined 0.47%. Japan’s Nikkei 225 slipped 0.5%.

According to reports, the seven-day average of daily coronavirus cases in the US surpassed the peak seen last summer when the nation didn’t have an authorized covid-19 vaccine, that country’s Centers for Disease Control said.

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