New Delhi: India’s main stock indexes closed at a record high as investors bet that Asia’s third-largest economy will keep the stimulus taps flowing to recover from a deadly wave of the coronavirus.
The NSE Nifty 50, the country’s most liquid gauge, breached the 16,000-mark for the first time and the benchmark S&P BSE Sensex closed at the highest level in data going back to 1979. The latter is the 12th-highest gainer among almost 100 global indexes tracked by Bloomberg over the past year.
The run-up in stocks comes before the central bank’s monetary policy decision Friday, where interest rates are expected to be left at an all-time low even as inflation accelerates. The upswing factors in expectations of future growth as central banks around the world take steps to protect their economies, Indian Finance Minister Nirmala Sitharaman told parliament on Tuesday.
“We are seeing a lot of indicators of economic recovery,” said Vinay Khattar, head of research at Edelweiss Wealth Management Ltd. “We are advising clients to stay invested in equities and if there is any decline, it should be used as an opportunity to buy.”
India has seen a surge in first-time investors, willing to buy riskier assets as returns from bank deposits and traditional savings avenues dip. The number of retail investor account surged nearly 35% in the financial year ended March to reach 55 million, according to the Securities and Exchange Board of India, a trend similar to what is being seen in developed markets like the U.S.
The Reserve Bank of India’s easy money policy stance, which is in contrast to many other emerging-market central banks, has ensured ample liquidity that has supported the securities market even during the deadly second wave of coronavirus that forced local lockdowns and overwhelmed the country’s health infrastructure between April and June.
The pain is visible in tepid earnings for companies. Of the 31 Nifty companies that have reported results so far, 19 or over 61% have missed analyst estimates.
“There may be a rise in the earnings going forward but no one knows how much they would increase,” said Deepak Jasani, head of retail research at HDFC Securities Ltd. “Investors need to keep taking profits and not go overweight on equities.”- Bloomberg
Also read: Market capitalisation of BSE-listed companies hits record high of Rs 238.95 lakh crore