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BLOOMBERG
Key Indian stock indexes jumped to all-time highs as resilient company earnings and a brighter economic outlook continue to prompt domestic as well as foreign investors to pump more money into the market.
The S&P BSE Sensex rose 0.7% to finish at 63,384.58 in Mumbai, while the NSE Nifty 50 Index advanced by a similar measure to 18,826.00. The gauges have added more than 10% since rebounding from their March lows.
The rally is largely driven by the strength of India-focussed stocks on the back of a strong economic momentum, as a global slowdown has impacted its export-oriented sectors, such as information technology. Investors continue to bet on the huge potential for local manufacturing and the nation’s expanded role in the global supply chain.
Key macroeconomic indicators remain stable and easing commodity costs have helped companies post healthy earnings. Expectations that interest rates have almost peaked could further boost demand.
“We are still in a bull market,†Sahil Kapoor, chief market strategist at Nuvama Wealth, said by phone. “We see Nifty reaching 19,000 in the near term,†he said, adding that the 50-stock gauge could cross the 20,000 mark in the next 24 months, provided earnings growth stay strong.
Foreigners have been instrumental in supporting the three-month long rally as global funds turned buyers of local shares early this year, after withdrawing record $17 billion last year.
Since late March, foreigners have bought more than $8 billion of Indian stocks, while flows from local institutional and retail investors have also been strong.
Equity mutual funds in India have received inflows for 27 months through May, with significant contributions from pre-determined monthly investments by retail investors.