The bullish sentiment witnessed during Mahurat trading day on the Bombay Stock Exchange on Wednesday has set a positive tone for the year ahead.
Mahurat trading takes place for one hour on the day of Diwali, since it is considered auspicious.
Though the Sensex rose only 0.2% on Wednesday, there was a renewal of investor interest in old-economy stocks with cement, capital goods and power leading the way in the first half.
“The mood was buoyant and investors were happy as the government looks set to stick to reforms,” said Dipan Mehta, a member of the BSE, about Wednesday’s trading.
The markets had rallied during the four trading days that led to the Mahurat session.
Market players said foreign investors have been closely watching the India story and the government’s recent reforms moves, including lifting controls on diesel prices, have aided buying sentiment.
“The reforms momentum is gaining pace and foreign investors are keenly watching this. They are very bullish on India,” said Sudip Bandyopadhyay of Destimoney Securities.
“There may be a bit of a correction, but that is how the market trades,” he said.
In a television interview on Wednesday, veteran market investor Rakesh Jhunjhunwala said there could be a major correction in December or only after the Union Budget in February 2015.
The Sensex has already risen 26% from Samvat 2070 to 2071, of which about 12% came after the Narendra Modi government took office after the general elections in May.