Is the India Story back in strength on the markets?
The benchmark Sensex jumped by a handsome 306 points or 1.8 per cent in intra-day trading on Thursday, defying the normal trend of Indian bourses echoing Asian markets before losing ground. It was powered by hefty increases in optimism surrounding the State Bank of India and Reliance Industries Ltd and overall corporate results.
But analysts advised cautious optimism for investors, and suggested a longer-term horizon for those wanting to get in.
The 30-share index closed at 17,574 points with a net gain of 101 points, or 0.6 per cent, contrasting a 1.1 per cent fall in China’s Shanghai Composite index and a 1.3 per cent fall in Japan’s Nikkei 225.
“The corporate results that are coming are good and markets are fairly valued but it will remain volatile over the next couple of months,” said the Chief Investment Officer of a mid-sized fund house on condition of anonymity. “Investors can enter and should stay put in the market but only with a long-term horizon.”
Experts say that while there are positive factors on the domestic front and fundamentals are strong, there are concerns on rising inflation and global factors.
“Investors can invest with a horizon of at least three years,” said Vinay Gairola, managing director, Atlantis Investments.
Among the Sensex companies, heavyweights like Reliance Industries and State bank of India that have a combined weightage of 17.9 per cent in the index rose by 1.5 per cent and 5.6 per cent respectively.
While the market expects Reliance to come out with strong results on Friday, SBI is expected to see a boost in its profits as the result of an anticipated extension of relaxed provisioning norms against the non-performing assets (NPAs) by the Reserve Bank of India for one more year.
The Sensex has gained strongly since the budget announcement in February and is up by 8 per cent since then on account of strong inflows from foreign institutional investors.