BSE Sensex and Nifty surged to fresh highs for the second consecutive day, buoyed by the positive momentum from the recent reform measures announced by the government and higher global markets.
Sensex rose over 400 points to a new high of 27,759 while Nifty surged over 120 points to a record high of 8,291.
The rupee on Friday rose to 61.35 per dollar versus its previous close of 61.45 as stronger local domestic markets boosted the Indian currency.
The rupee has remained in the 61-62/dollar band despite the dollar’s rally against global currencies after the US Federal Reserve’s optimistic view about the US economy.
Boosting the sentiment, Finance Minister Arun Jaitley yesterday said India’s economy is expected to do better in the second half of the fiscal year to March 2015, adding that he expected to hit his revenue target. Hopes are now rising that the RBI may be able to ease monetary policy as early as its next meeting in December given a slowdown in consumer price growth.
The rally in Indian markets has also been fuelled by a sharp drop in global crude prices, which have hit a four-year low. The fall in Brent crude means significant savings for the Indian economy, which is likely to narrow both the current account deficit and the fiscal deficit.
Foreign investors have also turned big buyers of Indian equities in the past few sessions after staying away for most part of this month. Yesterday, they bought Indian equities worth Rs. 1,257 crore adding to the Rs. 755 crore purchase on October 29.
With today’s gains, Sensex and Nifty have risen for the ninth time in the past 10 sessions. The sharp gains have made some analysts cautious. “The Nifty has broken out of the 7800-8100 range and could rise to 8300-8350 levels. But it comes with the risk of a deeper correction,” says market analyst Ambareesh Baliga.
IT stocks led the gains today on higher-than-expected growth in US economy, the biggest market for Indian outsourcers. Data released yesterday showed US economy grew a better-than-expected 3.5 per cent in the third quarter. Infosys and HCL Tech were up nearly 2 per cent. Banking stocks also gained on hopes of earlier-than-expected rate cuts from RBI. State Bank of India rose 2.3 per cent while HDFC Bank gained 1.7 per cent.
Asian shares ticked higher on Friday as investors cheered upbeat US growth data. Wall Street surged late in the session on Thursday, after data showed surprisingly strong third-quarter U.S. economic growth as the trade gap narrowed. (With Agency Inputs)