Markets surge as investors repose faith in NDA, NSE breaches 8000-mark

  • HT Correspondent, Hindustan Times, MUMBAI
  • Updated: May 26, 2016 15:32 IST
Investors celebrated two years of the Modi government as NSE and sensex are touching new highs. (HT Archive)

The benchmark Sensex breached the 26,000-mark on Thursday and the Nifty crossed 8,000 for the first time since November in what is being seen as investor endorsement of the economic policies of the NDA government on its second anniversary.

The 30-share Sensex traded at 290 points, up 1.1%, to reach 26,172 points, and the NSE’s Nifty was up 0.9% at 8,010 points at 1:30 PM.

The market rally will come as a big boost to the Narendra Modi government which is pushing for a wide range of economic reforms to kickstart a struggling economy amid a global slump.

Infrastructure major L&T was the biggest gainer, rising 12.1% after the company posted unexpected gains on good orders and also due to the clarity on a successor to chairman AM Naik.

The company -- often viewed as the bellwether of the economy -- is betting on government spending on infrastructure to drive growth. Overseas, it is bidding for projects in Far East and Africa to counter a slowdown in the West Asia market.

SBI, BHEL, ONGC and ICICI Bank were the other gainers.

A Deutsche Bank report said that in the past 24 months, the reform agenda and policy decisions have been on track though not entirely smooth-sailing despite the overwhelming political mandate in 2014.

“Policy decisions have largely been in cohesion with the central bank, which saw key initiatives like adoption of an inflation targeting framework, formation of the policy committee and coordination on dealing with the banking sector stress,” the report said.

“Tough decisions like amending the India-Mauritius tax treaty were also taken to plug tax loopholes.”

Read | Big bang reforms are a myth, fast-track growth is real: PM Modi

The head of a large European bank said, the government has been trying to reverse adverse economic policies of the past years and two years is “too short a time”.

“The present government has been clear in its direction and that is something that even our board, back in Europe appreciates. Inflation has eased to 5% in the past 12 months mainly due to cycli­cal factors like low disinflationary forces and low rural wages,” he said.

Improving earnings have raised optimism at a time when investors are betting monsoon rains will be stronger than average, boosting the outlook for rural demand.

Private weather forecaster Skymet said on Tuesday monsoon rains are expected to be 109 percent above the long-term average, compared with its earlier estimate of 105 percent.

“The Monsoon is one major positive sentiment driver and global markets are also looking calm,” said Rikesh Parikh, vice president of equities at Motilal Oswal Securities.

“Also, the results season is on the verge of getting over and so far we have not seen any negative surprises. In fact, earnings are a tad better than market estimates and this comes after some four-five quarters of dull performances.”

Mirroring the optimism, foreign investors have bought Indian shares worth a $44.18 million so far this month, taking this year’s inflows to $1.84 billion.

Reserve Bank of India governor Raghuram Rajan, however, warned that a “sharp” slowdown in China’s growth posed a threat to the global and SAARC economy, highlighting a possible impact from the shadow banking system of its neighbour.

Read | As PM Modi heads for Saharanpur rally, a mixed message from Muslims

(With agency inputs)

also read

Tata Vs Mistry: Love of a plan
Show comments