India’s benchmark BSE Sensex closed above the 30,000-mark and Nifty hit an all-time high on Wednesday, tracking global cues and investors who are upbeat on prospects of faster economic growth.
Global markets too were up on possible tax cuts, likely to be announced on Wednesday by President Donald Trump to stimulate the US economy and the outcome of the French election allaying immediate concerns of political uncertainty in the euro zone.
The 30-share Sensex closed up 191 points, or 0.6%, at a historic 30,133.35. Nifty too closed at a lifetime high of 9,351.85. The 30-share BSE Sensex has flirted with the 30,000-mark a couple of times in intraday trading, but has never closed at that level.
The Sensex opened at 30,030.20 and rose almost 0.5% to touch 30,089.74 in morning trade, while Nifty hit a record 9,347.65.
On Wednesday, ITC led the Sensex chart gaining 3.4% followed by Mahindra & Mahindra 3.3%, HDFC 2.4%, Hindustan Unilever 1.8%, ICICI Bank 1.6% and Tata Motors 1.2%.
Since March 2015, the Indian capital market returns have improved and preference for financial savings has risen, CLSA analysts said in a recent note. Last November’s demonetisation drive led to large inflows into financial savings in 2016-17, they said.
Global investors are pumping in billions of dollar into India, Asia’s third largest economy, where growth is expected to pick up.
Government think-tank Niti Aayog projected on Sunday an average annual growth of 8% for the next 15 years, with reforms such as the goods and services tax expected to kick in later this year.
Growth slowed to an estimated 7.1% in 2016-17 from 7.9% in the previous year due to the recall of 500- and 1,000-rupee banknotes.
A section of investors switched to equity schemes of mutual funds as investment in the real estate sector slowed after demonetisation was announced on November 8.
“The BSE Sensex reaching the 30,000-mark today was a much-awaited milestone. This was achieved on the back of strong economy and investments from both FPIs and local institutions,” said Bombay Stock Exchange CEO Ashish Chauhan.
Analysts said the global economic growth revival coupled with prospects of faster reforms in India was improving investor sentiment
“Global economic growth prospects, political stability in India and renewed optimism if swift decision making has buoyed up the market in recent months,” said Soumya Kanti Ghosh, chief economic adviser at the country’s biggest lender State Bank of India.
“More reforms are expected in coming days and the economic prospects are getting better.”
Global markets are rallying on hopes of a fiscal stimulus package promised by United States president Donald Trump, a lower-than-expected tightening of interest rates by the Federal Reserve, revival of industrial growth in Europe and Japan. An uptick in commodity prices has turned the fortunes of countries such as China, Brazil, Russia and South Africa.
Since March 2015, the Indian capital market returns have improved and preference for financial savings have risen, CLSA analysts said in a recent note. The demonetisation drive led to large inflows into financial savings in 2016-17, they said.
In Asia, stock markets gained for the fifth consecutive day on Wednesday after Wall Street hit new highs.
Japan’s Nikkei ended up 1.1%, while Hong Kong’s Hang Seng rose 0.5%, its fifth straight day of gains. Shanghai Composite Index edged up 0.2%.
In the US, tech-heavy Nasdaq hit a record high on Tuesday, while the Dow and S&P 500 scaled new heights after strong corporate earnings indicated faster economic activity.
The market is abuzz with expectation that Trump’s reform proposals may include a cut in corporate tax rates and lower taxes on offshore earnings.
The euro gained on hopes of political stability in France and eurozone after business-friendly centrist Emmanuel Macron won the first round of the French presidential vote on Sunday. Opinion polls have put him ahead of eurosceptic Marine Le Pen when they face-off in the second round on May 7.
Markets also expect the European Central Bank not to rock the boat when it meets on Thursday for its monetary policy review.
Global crude oil prices were also muted at less than $50 a barrel on higher inventories in the US.