Sensex, Nifty hit record highs

The BSE Sensex and Nifty rose nearly 1 percent to a record high on Thursday as investors bet an improving economy and government reforms would allow the country to better withstand potential rate hikes by the U.S. Federal Reserve than other emerging markets.

The Nifty has gained nearly 31 percent in U.S. dollar terms so far this year to remain Asia’s best performing equity index, helped by optimism tied to the election of Narendra Modi as Prime Minister.

The Reserve Bank of India’s efforts to contain inflation have also improved confidence. Hopes are now rising that the RBI will be able to ease monetary policy as early as its next meeting in December given a slowdown in consumer price growth.

Thursday’s gains contrasted with a 0.5 percent fall in the MSCI Asia-Pacific index, excluding Japan after the Fed ended its massive bond-buying programme as expected, on Wednesday, but laced its economic assessment with a tinge of hawkishness.

“Fed’s decision is almost priced in and now each market is on its own merit. India stands out among emerging markets due to the bold and courageous decisions it has taken so far,” said Deven Choksey, managing director at KR Choksey Securities.

The 30-share BSE Sensex rose as much as 1.1 percent to an all-time high of 27,390.60, while the Nifty gained as much as 1.12 percent to mark a record high of 8,181.55, with both surpassing their previous highs hit on Sept. 8.

The benchmark BSE Sensex ended up 0.92 percent at 27,346.33, marking its highest close. The broader Nifty gained 0.97 percent, rising for eight sessions in nine.

India ended fuel price controls, raised gas prices, proposed opening up of the coal sector and relaxed rules for foreign investment in construction, earlier in October.

Exporters led the gains on the Fed’s increased optimism about the U.S. economy, with Infosys Ltd (INFY.NS) ending up 1.7 percent, while rival Tata Consultancy Services Ltd (TCS.NS) gained 2.1 percent.

Tech Mahindra Ltd (TEML.NS) rose 3.5 percent after the company’s July-September profit rose 7.3 percent to 5.89 billion rupees ($96 million).

Among drug makers, Dr.Reddy’s Laboratories (REDY.NS) rose 1.6 percent.

Among builders, Unitech (UNTE.NS) rose 8.1 percent and DLF Ltd (DLF.NS) gained 5.1 percent after India relaxed rules for foreign investment in construction.

Indian energy conglomerate Reliance Industries (RELI.NS) also rose 2.9 percent.

Among domestic oriented stocks, Larsen and Toubro (LART.NS) rose 1.3 percent, while HDFC Bank (HDBK.NS) gained 0.6 percent.

ICICI Bank (ICBK.NS) rose 0.5 percent after posting a record profit in July-Sept.

Maruti Suzuki India (MRTI.NS) rose 1.1 percent after the carmaker said its board had decided to recommend an increase in the foreign institutional investor holding limit to 40 percent.

However, Cipla (CIPL.NS) fell 1 percent on profit-taking after hitting a record high of 663.80 rupees.

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Pramod Baviskar

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