The Telegraph
Saturday , March 8 , 2014
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Indices race to new milestones

Mumbai, March 7: The stock markets continued their forward march today, buoyed by strong FII inflows on hopes of an electoral mandate in favour of the NDA and better economic indicators.

The Sensex soared to a new closing high of 21919.79, while the Nifty breached the 6500 mark for the first time to end at 6526.65.

Investor wealth swelled by Rs 85,000 crore today.

Meanwhile, At the interbank foreign exchange market, the rupee today breached the 61-mark in intra-day trade and closed at a new three-month high of 61.07 against the dollar because of the FII purchases.

Provisional data from the stock exchanges showed that the FIIs made purchases amounting to Rs 2,600 crore — the sixteenth straight session in which they were net buyers.

During this period, the FIIs have brought in over $1 billion even as the US Federal Reserve is tapering its bond programme.

In India, too, the conditions are actually challenging with the economy growing at a disappointing 4.7 per cent in the third quarter and uncertainty regarding the outcome of the election.

Market circles said there were a couple of reasons behind the interest of foreign investors in domestic equities.

Recent opinion polls have indicated that the BJP-led NDA alliance, expected to be business-friendly, has a good chance to come to power. Besides, there is an optimism that the economy will see a turnaround. Recent data have shown a sharp drop in the country’s current account deficit.

“The FIIs are buying into tomorrow,” an analyst said, adding that the foreign players are expecting a stable government at the Centre and that the economy’s prospects will improve over the next few months.

The Sensex touched a lifetime intra-day high of 21960.89 before settling at 21919.79, a sharp rise of 405.92 points, or 1.89 per cent.

The Nifty of the National Stock Exchange spurted 125.50 points, or 1.96 per cent, to end at a new high of 6526.65. It also hit a lifetime high of 6537.80, crossing its previous record of 6415.25 on December 9, 2013.

Experts are, however, divided on the road ahead in this pre-election rally.

Optimists believe that since domestic valuations remain attractive, the indices can soar higher; others maintain that a correction may be in the offing as campaigning picks up and political parties forge alliances.