Sensex, Nifty at record highs on Modi’s reform push, hopes of gradual Fed rate hikes
Sensex closed at 30,750.03 and Nifty crossed the 9,500-mark.business Updated: May 25, 2017 18:31 IST
Indian share benchmarks closed at record highs on Thursday tracking global cues and on renewed hopes that the Narendra Modi government will continue to push reforms to accelerate economic growth and boost jobs.
Some of the Asian markets hit all-time highs after US Federal Reserve indicated gradual interest rate hikes and as OPEC members meet to cap output.
The BSE’s benchmark Sensex rose 448 points, or 1.5%, to close at 30,750.03, after hitting an intra-day record 30,793.43. The Nifty crossed the 9,500-level and ended at 9,509.75.
L&T led the Sensex chart gaining 5%, followed by ICICI Bank 3.5%, HDFC Bank 3%, Infosys 3% and GAIL 2.9%.
Analysts say foreign funds stepped up investment in India as they sensed faster reforms in the remaining two years of Modi’s 5-year tenure. The Modi government completed three years in office on Thursday.
On Wednesday, Modi unleashed a raft of reform steps aimed at ramping up the domestic manufacturing, creating more jobs, easing foreign investment flows and rewarding farmers.
Finance minister Arun Jaitley said the Union Cabinet cleared a proposal to scrap the decades-old Foreign Investment Promotion Board (FIPB), which will facilitate easier capital inflows into India.
The government also unveiled a “Strategic Partnership” model to help Indian companies forge joint ventures with foreign firms to manufacture fighter jets, helicopters, armoured vehicles and submarines.
The Cabinet also approved a local sourcing rule for government purchases to boost the Make in India initiative.
On Thursday, Asian markets hit two-year highs after the US Fed signalled a more cautious approach to future rate hikes.
Japan’s Nikkei closed up 0.36% while Hong Kong’s Hang Seng was up 0.8%, Korea’s Kospi 1.1% and China’s Shanghai 1.4%.
On Thursday, the Organization of the Petroleum Exporting Countries (OPEC) decided to extend cuts in oil output by nine months to March 2018, which may help oil prices to stay above $50 a barrel this year and bolster government finances of oil producing countries.
A higher oil price triggers a risk-off mode in equities market and encourages foreign investors to pump in more money in emerging markets such as India.
Investors also took comfort from the minutes of Fed’s May 2-3 meeting, which showed policymakers are eager to pause on rates until it was clear that the recovery in the US was durable.