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The Indian market on Friday continued to scale new highs as foreign investors continued to pour in dollars on the back of improving sentiment post the election of business-friendly government of Prime Minister Narendra Modi.
The Sensex gained about 377 points, or 1.5% to close at a new all-time high of 25,396.46, while the broader Nifty gained 109.3 points, or 1.46% to log a new high of 7,583.4. Both the indices record new intra-day highs of 25,419.14 and 7,592.7 during day trade.
The latest boost to the stock prices came from oil and gas stocks such as index heavyweights Reliance Industries and Oil & Natural Gas Corp (ONGC), which surged on hopes that the PM Modi will increase natural gas prices.
ONGC gained 11%, RIL added 3% and GAIL advanced almost 8%. All three stocks were among the top gainers in Sensex and contributed to bulk of gains in points.
After correcting almost 2% in the previous week, the benchmark indices added nearly 5% this week. The Indian markets have gained about 3% since Modi's swearing in on May 26.
“Investors had been wanting for a clear mandate at the centre. Markets have been running up on the back of a stable government at the centre and improving global factors,” said Nirmal Jain, chairman, IIFL.
Foreign investors have pumped in over Rs 6,600 crore ($1.2 billion) into Indian stocks since the appointment of Modi. The year to date tally of FII investment has almost touched the $8.5 billion mark.
“This is just the beginning of the bull phase. There will be some correction on the way but overall the markets will do well,” said Deven Choksey, managing director, KR Choksey Securities.
Investors are hoping that the new government will take steps to turnaround the economy and kick-start investments.
“The government just needs to de-bottleneck and create favourable environment. If the economy is able to grow at 6.5%, it will have tremendous multiplier effect,” said Choksey.
The positive momentum in the secondary market and availability of foreign capital has also helped India Inc, which has now been able to tap the market to raise capital.
In the past two weeks, the Street has seen several big-ticket capital raising. Cellular company Idea successfully completed its Rs 3,000 crore equity placement. Earlier, Yes Bank raised similar quantum, while promoters of Kotak Mahindra Bank pared their holdings worth Rs 2,200 crore to Canadian pension fund.
“The momentum has just started. We will see more and more companies raise capital,” said Choksey.
Among the other major gainers on Friday were banking and finance stocks. Housing Development Finance Corp (HDFC) rose 2.9%, State Bank of India added 1.6 per, while Kotak Mahindra Bank advanced 3.9% higher.
Market experts said that the stocks would continue to do well thanks to the ease global liquidity situation. The European Central Bank (ECB) on Thursday took interest rates to negative territory to help spur economic growth.
“This kind of optimism is positive for the market. The rally is justified as markets and could continue as are valuations are still not expensive,” said Gautam Chhaochharia, head of research (India), UBS.
