Skip to main content

Pre-poll rally kicks in as Sensex scales 21,500

Dalal Street reached new milestones on Thursday as foreign institutional investor (FII) inflows continued unabated amid growing conviction that the Bharatiya Janata Party-led coalition may form the next government and the worst may be over for the economy. Both benchmark indices — Sensexand Nifty — closed at record highs after the sharp drop in the current account deficit pushed up the rupee, alleviating fears about the impact of the US Federal Reserve’s stimulus tapering on FII inflows.

FIIs poured Rs 1,272.93 crore into Indian stocks on Thursday, provisional data shows. These investors have invested about Rs 3,600 crore so far in 2014.

The rally was aided by a strengthening belief among investors and traders that the BJP’s Narendra Modi, considered pro-business, would become the next prime minister. “There is very clearly a Modi wave in the market at present. A sharp improvement in current account deficit is also being viewed positively by investors,” said Tirthankar Patnaik, director, institutional research, Religare Capital Markets.

The BSE Sensex rose 237 points, or 1.11 per cent, to close at 21,513.87, surpassing the previous closing high of 21,373.66 on January 23. The NSE’s Nifty jumped 72.50 points, or 1.15 per cent, to close at 6,401.15. The index’s previous record closing was 6,363.90 on December 9, 2013.

The rupee on Thursday ended at a near three-month high of 61.12 compared with the previous close of 61.76 a dollar. The rupee had ended at 61.04 a dollar on December 10.
India, part of the Fragile Five — a term coined by a Morgan Stanley analyst to identify Turkey, India, Brazil, Indonesia and South Africa as economies dependent on short-term FII flows to fund their current account deficits — was considered among the most vulnerable to sharp foreign selling after the start of the Fed’s stimulus drawdown on January 1. Many analysts felt the dollar would strengthen against these currencies, including the rupee, due to the tapering, making FIIs averse to riskier markets such as India.  But, the government’s steps to reduce the current account deficit, including gold import controls, and the Reserve Bank of India’s efforts to ease the rupee’s volatility have helped boost investor confidence. India’s current account deficit in the December quarter fell to an eight-year low of 0.9 per cent of the gross domestic product, from 6.5 current account deficit a year earlier.

“Sentiment has improved on macroeconomic fundamentals with relief from the twin deficits  while dilution in political risk increases confidence on better management  of growth-inflation conflicts in play. The combination of these two major factors has revived FII appetite for India,” said Moses Harding, group chief executive officer (liability and treasury management) and  chief economist, Srei Infrastructure Finance.  But, analysts do not expect the rupee to strengthen further despite the gush of FII money. “The RBI may not allow any sharp appreciation because it may need to recoup its foreign exchange reserves. If the rupee appreciates beyond Rs 61 per dollar, the RBI may step in to buy dollars,” said Anindya Banerjee, currency analyst, Kotak Securities. Since August 28, when the rupee had touched an all-time low of Rs 68.85 per dollar, it has appreciated by 11 per cent.

Courtsey : Business Standard 

Comments

Post a Comment

Popular posts from this blog

Wizard of Dalal Street: Govind Parikh's investment mantra

Wizard of Dalal Street: Govind Parikh's investment mantra Govind Parikh of Govind Parikh Securities says selling right is more important than correct buying. He says it is necessary to keep a lot of cash. "We keep an average 10 percent cash in our portfolio," he says I like to buy things in a bad market. Additionally, don't look current cash flow, concentrate on future cash flows — that is what  I look at," says Govind Parikh of Govind Parikh Securities. He advises investors to buy good quality stocks when the market crashes. While sharing his investment philosophy with ace investor Ramesh Damani, on the Wizards of Dalal Street, Parikh says management integrity is very important when deciding which stock to bet on. He tells investors not to buy stocks impulsively. According to him, selling right is more important than correct buying. He says it is necessary to keep a lot of cash. "We keep an average 10 percent cash in our portfolio," he says. He al...
2 comments
Read more
LIC IPO Shorts  The largest market capitalization in the making. The govt selling 5 percent stake...... The cuttoff price 2100 Listing price 3000 or more shall be included in the nifty Pro Large base of policies Large Market Share Cons Decling market share viz viz private companies higher cost insurance policies Bottom line can apply for LIC IPO for listing gains..... For More do have a look at the Link Below https://www.youtube.com/watch?v=VPGp5V1ecDM  
Post a Comment
Read more
  NASDAQ's Crack Will Rattle Global Equities During the week, the confidence of the bulls got shattered when tech-focused US companies crashed rattling the entire financial markets. Nasdaq's crash does not look like a normal correction but seems like a bigger downward spiral unfolding after valuations sky-rocketed. Given that US elections are only 52 days away, it seems unlikely that US markets will make fresh highs again and there is every likelihood that selling pressure may continue even in broader markets. Crude oil too has given up most of its gains and prices are below USD 40 per barrel on expectations of lower demand going ahead which suggests that global recovery might take longer than earlier anticipated. In contrast surprisingly, gold's move is not hinting at any major crash in the financial markets, given that gold prices consolidated and remained steady even when Nasdaq plummeted. One of the important ways to analyze the psyche of an investor is by measuring mut...
Post a Comment
Read more