Mumbai, Nov. 29: Investors whooped today and sent the Sensex soaring almost 329 points as the gridlock in Parliament appeared to end after the government — confident it had rustled up enough support to avoid any embarrassment — agreed to a debate with a non-binding vote in both Houses on the contentious move to allow foreign investment in multi-brand retail.
The bellwether index leapt to a 19-month high at 19170.91, while the Nifty closed the day at its highest point in this calendar year at 5825.
The end to the deadlock ignited hopes that the government would be able to now kickstart the stalled process of economic reforms.
Significantly, the undertone has now turned bullish. Market experts believe that stocks will rally in the next few months as the Centre takes more measures and the RBI cuts interest rates.
“The 19000 figure was coming. It has come sooner than most people had expected. But there is no need to get too excited about it. We will see much higher levels in the months to come,” said Manish Sonthalia, vice-president and fund manager at Motilal Oswal AMC-PMS.
Investors may have more cause to rejoice when and if the benchmark index breaches its historic high of 21000 next year.
The benchmark index had opened firm today, but the rally gained momentum after a settlement was reached over the vexed issue of FDI in retail.
“This was a huge relief for the markets as important bills will now be taken up. There is also optimism because the UPA government has been able to secure the required number of votes to see off the challenge. After this victory, it will be able to push through other reform measures,” said an analyst.
He added that Goldman Sachs’ ringing endorsement of the Indian economy had come as the icing on the cake, spurring expectations that this would prompt foreign investors to funnel money into the country.
The US investment bank expects the Nifty to hit 6600 by December next year.
Dipen Shah, head of PCG Research at Kotak Securities, added that the stock markets had started factoring in some further announcements on fiscal reforms with the deadlock on retail FDI issue being resolved. “We will watch out for further fiscal initiatives, more so, in core sectors. Initiatives in areas such as infrastructure, land acquisition, goods and services tax, mining and power will support sentiments,” he averred.
Reflecting the solid momentum, the Sensex hit an intra-day high of 19205.33 and subsequently ended at 19170.91, a gain of 328.83 points. This is the highest level it has touched since April 28, 2011.
Similarly, the 50-share Nifty also finished at its highest close since April 27 last year.