Sensex, Nifty touch new record highs on IMF growth projections

IMF forecast projects India would be the world’s fastest-growing major economy in 2018 and 2019

January 23, 2018 03:07 pm | Updated November 28, 2021 08:10 am IST - MUMBAI

 A woman walks past a bronze replica of a bull at the Bombay Stock Exchange.

A woman walks past a bronze replica of a bull at the Bombay Stock Exchange.

Benchmark equity indices scaled new highs on Tuesday as investor sentiment was buoyed after the International Monetary Fund raised its projections for global growth and forecast that India would be the world’s fastest-growing major economy in 2018 and 2019.

The 30-share Sensex gained 341.97 points or 0.96% to close above the 36,000-mark for the first time at 36,139.98. The index has gained 2,000 points in less than a month’s time. It touched 34,000 on December 26 and then moved above 35,000 on January 17.

The broader 50-share Nifty also closed above the 11,000 mark at 11,083.70, up 117.50 points or 1.07%.

The gains in the domestic market were also part of the overall strong global trend as the passage of a bill for temporary funding in the U.S. brought an end to a partial government shutdown. Most of the leading Asian indices including the Hang Seng and Nikkei gained over 1% on Tuesday.

The IMF, in its latest World Economic Outlook Update on Monday, had estimated that the Indian economy would grow by 7.8% in fiscal 2019-2020, making it the world’s fastest-growing economy for that year.

Source: NSDL, BSE.

Source: NSDL, BSE.

 

“The turnaround in the industrial/economic growth in October 2017 along with big policy announcements related to bank recapitalisation and Bharatmala led to a good upmove in October 2017,” said Deepak Jasani, Head - Retail Research, HDFC Securities.

“In January 2018, we are witnessing FIIs returning to the buy side in a big way after a break,” he added.

Foreign investors have been net buyers at ₹8,400 crore in the current month after having sold equities worth ₹5,883 crore in December. Market breadth, however, was negative with 1,578 stocks slipping on the BSE against 1,348 gainers.

Some participants, while attributing the recent rally to a revival in earnings growth, said concerns still prevail including crude prices — currently hovering around two-year high levels of $70 per barrel.

‘Earnings revival’

“The markets are celebrating the long-awaited earnings revival,” said Arun Thukral, MD & CEO, Axis Securities. “Despite the low base, the quarterly results so far have been encouraging.”

“Barring few overhangs like crude oil at two-year high, inflation at the upper end of RBI’s comfort zone, slight slippage expected on fiscal front in the forthcoming budget, and probable geopolitical risks, we continue to remain bullish on Indian economy and markets over the next 3 to 5-year investment horizon,” he added.

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