Nifty at new-high, Sensex 88 pts shy

Indian markets extend gains for a fourth day

The benchmark NSE Nifty on Tuesday closed at a new record high for a second consecutive day, while the BSE Sensex ended just 88 points shy of its all-time closing high of 29,681.77 touched on January 29. The Nifty after briefly trading above the 9,000-mark ended at 8,996.25, up 39.5 points, or 0.44 per cent after blue-chip Tata Consultancy Services (TCS) and Reliance Industries (RIL) rose a sharp 4 per cent each. The 30-share Sensex closed at 29,593.73, up 134.59 points, or 0.46 per cent, its fourth straight advance. Shares of RIL gained 4.4 per cent to Rs 901.65, after brokerage CLSA said the company would post record profits in the fourth quarter and advised buying the stock. Shares of TCS closed 3.9 per cent higher to 2774.70, an all-time high.

Investor sentiment remained buoyant on hopes that India’s weightage on the MSCI index would increase following the Budget proposal to have a composite class for foreign investors. The move to have a composite cap by merging foreign direct investment (FDI) and foreign portfolio investor (FPI) limits is expected to create a lot of headroom for buying by overseas investors.

The market has remained volatile with an upward bias since the Union Budget on February 28.

“After the Union Budget overhang, investors will now focus on policy execution and on how the corporate earnings evolve. Moreover, with the RBI monetary policy review round the corner, investors will also be busy guessing the policy action and should the stand be dovish, we can except Nifty to scale new highs in March 2015,” said Ravi Sundar Muth-ukrishnan, senior vice-president and co-head research at ICICI Securities.

The Indian markets are currently trading around 10 per cent above their long-term trading valuations. Experts don’t foresee sharp gains from current levels.

“There were significant expectations built up about the Budget — on tax provisions, on a boost to manufacturing and somewhat paradoxically, on fiscal discipline. The usual ‘buy on rumour, sell on news’ phenomenon could lead to a correction in the near term because Indian equities are trading at a significant valuation premium relative to the Asia ex-Japan,” said Manishi Raychaudhuri, MD & Asia Pacific Equity Strategist, BNP Paribas.

The Indian markets trade at about 19.4 times the 2014-15 estimated earnings and 16.6 times on a rolling one-year forward earnings basis, said ICICI Securities.

On Tuesday, the broader market outperformed the benchmark indices with the BSE Midcap index gaining 1.18 per cent and BSE Smallcap index advancing 1.4 per cent. There were around 1,660 advancing and 1,194 declining shares on BSE. Among sectoral indices, the BSE Oil & Gas and BSE IT indices gained the most, while BSE Realty and BSE Auto were the biggest losers.

Other Tata group shares, including Tata Metaliks, Tata Elxsi and Tata Investment Corporation, rose by more than 10 per cent each on Tuesday.

According to provisional figures, foreign investors net-bought shares worth Rs 773 crore on Tuesday. So far this calendar year, FIIs have invested nearly $4.5 billion (Rs 27,000 crore) in the cash market. The benchmark Sensex is up 7.6 per cent so far this calendar year.