E-Paper
Markets at fresh peak, investor wealth surges as US poll ends
The rally boosted domestic investors’ wealth by ₹1.33 lakh crore, which analysts attributed to hopes of a fresh US stimulus.
Indian shares soared to a record high on Monday, mirroring global markets that cheered Joe Biden’s win in the US over the weekend after a tightly fought presidential election.
The rally boosted domestic investors’ wealth by ₹1.33 lakh crore to ₹165.69 lakh crore, which analysts attributed to expectations of fresh injections of liquidity in the US economy through additional fiscal stimulus measures likely to be announced by the incoming Biden administration that has listed tackling Covid as its most immediate priority.
According to analysts, global markets could see greater inflows supported by wider healthcare reforms in the US, greater alignment with European climate change policies and environmental, social and governance (ESG) measures.
The BSE Sensex rose 704.37 points, or 1.68%, to close the day at 42,597.43. The Nifty gained 1.61% to 12,461.05.
The Sensex hit a lifetime high of 42,273.87 on 17 January 2020 and Nifty at 12,430.50 before the big crash in March when jittery investors rushed to sell equities amid widespread uncertainties post the strict lockdown announced to combat the pandemic.
Stocks across Asia-Pacific jumped with markets in Japan, China and Hong Kong rising 1-2%. “The markets continued their upward trajectory across indexes and segments based on positive global developments emanating from the fact that more orderly conditions and aggressive pro-growth strategies may prevail with a change of regime in the US. The prospects of higher fiscal and monetary expansion is giving the markets greater comfort on liquidity and interest rates. This is the best thing to happen for the markets, which have been fuelled by liquidity since the pandemic,” said Joseph Thomas, head of research, Emkay Wealth Management.
Driven mostly by foreign liquidity, Indian benchmark indices have surged more than 61% from the lows seen in March. Both indices are, however, still 2-3% lower so far in 2020 compared to last year even though they have turned positive in rupee terms.
The comparatively weak Indian market has not deterred foreign investors from continuing their inflows. In 2020, foreign institutional investors (FIIs) pumped in $7.61 billion into stocks at a time when domestic institutional investors have largely stayed away. In contrast, domestic equity mutual fund schemes continued to see outflows for the fourth month.
According to data issued by the Association of Mutual Funds in India (Amfi) on Monday, net outflow from equity mutual fund schemes was at ₹3,991 crore in October. This was sharply higher than outflows of ₹1,009 crore in September though it declined from ₹4,028.83 crore in August.
