India is proving to be a star performer on the global market. Domestic indices have outpaced almost all the leading equity benchmarks worldwide, even as they broke through key psychological barriers on Tuesday, with foreign investors providing the liquidity support.
The 30-share Sensex of the Bombay Stock Exchange (BSE) closed at 20,001.55 on Tuesday, gaining 95.45 points, or 0.48 per cent. This is the first time since January 15, 2008 that the Sensex has closed above the 20,000-mark. The broader 50-share Nifty of the National Stock Exchange (NSE), meanwhile, ended at 6,009.05, up 28.60 points, or 0.48 per cent.
While both the Sensex and Nifty have gained nearly 8.70 per cent in the last one month, the former’s 15 per cent gain this year also makes it the best performer among the world’s 10 largest stock markets by value.
In comparison, over the last one month, the FTSE is up 8.40 per cent and Tokyo’s Nikkei has gained 4.61 per cent, while Hong Kong’s Hang Seng and Seoul’s KOSPI rose 4.87 and 3.22 per cent, respectively. The Shanghai Composite lost nearly 2 per cent in this period.
The scene is no different in the US, with the S&P500 and the Dow Jones Industrial Average (DJIA) providing returns of 6.63 and 5.29 per cent, respectively. In Europe, the Frankfurt DAX has gained less than 6 per cent, while the Paris CAC has been comparatively better with returns of 8.22 per cent in the last one month.
Meanwhile, market analysts in India are unanimous in attributing the current rally to strong inflows by FIIs. Data clearly shows that they pumped in over $16 billion in Indian equities in the current calendar year.
Since June, FIIs have bought shares worth over $2 billion every month.
According to provisional data, FIIs were net buyers at over Rs 2,300 crore on Tuesday.
“Markets have touched the 20,000-mark on the back of very strong global liquidity and FII flows,” confirmed Naresh Kothari, president, Edelweiss Securities. “While valuations are a little stressed, markets can continue to do well as long as there is liquidity,” he added.
While there have been some concerns on valuations, analysts are quick to point out that the premium is well deserved due to the economy’s high growth rate. India’s GDP expanded 8.8 per cent last quarter from a year earlier, the highest among major economies after China and Brazil.
On Tuesday, Sensex constituents, including TCS, Wipro, Tata Power, L&T, Infosys Technologies, HDFC Bank, Cipla and Bhel, all gained in the range of 1 to 4 per cent each. Overall market breadth, however, was in the red, with nearly 70 per cent of stocks losing ground.
