MUMBAI: Indian shares jumped to their highest-ever trading level yesterday, beating the previous record set in 2008, fuelled by strong foreign fund inflows and an easing of both global and domestic economic concerns.
The Bombay Stock Exchange benchmark Sensex hit a new high of 21,293.88 points in morning trade on Dhanteras day, part of the five-day Hindu festival of lights called Diwali.
The index’s previous intraday record high was 21,206.77 points on January 10, 2008.
The Sensex retraced later on profit taking to end at a new record close of 21,196.81 points.
Sentiment has been improving across Asian markets over hopes that the US central bank may delay plans to start tapering its massive stimulus programme.
India’s market has been sluggish for most of 2013, due to an outflow of foreign funds over fears of an end to the US programme, while the country’s slowing economic growth, weak rupee and high trade deficit also weighed.
But with global and domestic fears beginning to ease, investments are starting to flow in again.
Foreign funds pumped $2.55bn into Indian equities in October, taking their total purchases to $16.48bn for 2013, regulatory figures showed yesterday.
“This rally has been fuelled by an avalanche of global liquidity into emerging markets, after the reprieve by the US Fed as far as the US tapering plan goes,” said Ajay Bodke, head investment strategist with Mumbai brokerage Prabhudas Lilladher.
Local sentiment has improved as several Indian firms, including IT and auto giants, have reported better-than-expected earnings data for the September-ended quarter.
India’s Finance Minister P Chidambaram yesterday warned investors against “excessive exuberance” despite being confident that the country’s current account deficit may narrow, as exports improve and investments into India rise.
“The markets seem to be happy but I would caution investors against excessive exuberance,” Chidambaram told reporters in New Delhi.
Chidambaram said he was confident that India’s current account deficit — the broadest measure of trade — could be contained at $60 bn this fiscal, from an earlier figure of $70bn.
The appointment in September of renowned economist Raghuram Rajan as India’s new central bank governor also appears to have helped sentiment, analysts say.
Rajan, a former International Monetary Fund chief economist, has outlined a plan to boost investor confidence, fight high inflation and support the ailing rupee.
AFP
