Sensex, Nifty hit new peaks as reform talk spurs investors

Tags: News
The Modi government’s agenda, unveiled by President Pranab Mukherjee in Parliament on Monday, seems to have got an instant approval from stock investors, who lifted the 30-share Sensex and 50-pack Nifty indices to new peaks.

In his address to a joint session of Parliament, the President said the government was going to take a slew of measures to fix the flagging economy and put it in a high-growth path, rein in inflation, reignite the investment cycle, accelerate job creation and restore the confidence of domestic as well as international community. Mukherjee also hinted at a more muscular foreign policy.

The speech provided the first glimpse into what the Modi government plans to do and that lifted the spirits of an already energised stock market. Sensex closed at 25,580.21, up 184 points, while Nifty ended the day at 7,654.60, up 71.20 points or 0.94 per cent. The BSE bellwether hit a record high of 25,644.77 in intra-day trade before sliding a bit.

Analysts said the President’s speech raised expectations that the government would boost spending and accelerate approvals to mega infrastructure projects.

“The underlying bullishness is so high that any news is turning out to be positive one,” said Jagannadham Thunuguntla, head of research and chief strategist at SMC Global Securities.

Ten of the 12 BSE sectoral indices ended in green with those representing realty, power, capital goods and consumer durables being the top performers. Investor wealth swelled by about Rs 1 lakh crore in a day as 2,300 of the 3,167 BSE-traded stocks climbed.

Even defensive sectors like pharma and technology saw value buying at lower levels. Bank stocks bucked the trend, which built in a bit of downward pressure on the indices.

“We remain bullish on Indian equities. We believe investors will be willing to give a premium to growth hope and look beyond FY15 earnings estimates. Based on our top-down expectation of 15 per cent earnings growth in FY16 and 15 times PE, our Nifty target for 2014 end is 8,000,” said Gautam Chhaochharia, an analyst with UBS.

He said there could even be upside to this target based on how policy-making evolves

The biggest gainers of the day on BSE were Unitech, Grasim Industries, Sobha Developers, Sun TV, IFCI, PowerGrid, REC, Jain Irrigation, Videocon Industries, Castrol India, Prestige Estates, L&T, Coal India. Top losers included Pipavav Defence, Godrej Consumers, Bajaj Finserv, Jubilant Foods, HPCL, ONGC, BPCL, MCX and Yes Bank.

Impressive US jobs report, an upward revision of Japanese economic growth and last week’s ECB stimulus to boost the euro zone economy also aided sentiments. Surpassing all previous records, Nifty crossed the 7,600 mark for the first time on continued buying.

Shrikant Chouhan, head of technical research at Kotak Securities, said Nifty might rise to 7,850 level before the announcement of the Union budget. “Any dip from current level will be an opportunity to buy stocks. Nifty has a major support at 7,560,” he said.

The Union budget is scheduled to be unveiled in the first week of July.

Data showing bullish posturing by foreign institutional investors (FIIs), who bought shares worth a net of Rs 1,283.04 crore on Friday, also lifted the mood.

The FIIs remained net buyers on Monday and pumped in another Rs 536.68 crore. Domestic institutional investors were, however, net sellers of stocks worth Rs 490.03 crore.

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