The Bombay Stock Exchange logo is displayed at the entrance of its lobby in Mumbai. The Sensex yesterday surged past the psychologically key level of 27,000 to a third consecutive record high as recent data raised hopes about the economy.
Reuters/Mumbai
India’s benchmark BSE index yesterday surged past the psychologically key level of 27,000 to a third consecutive record high as blue-chips such as HDFC Bank gained after recent data raised hopes about the economy.
The BSE milestone comes a day after the broader NSE index surpassed the 8,000 level for the first time, providing a further psychological lift that has made India the best performer this year in dollar terms in Asian equities.
Traders attributed the gains yesterday to data showing the balance of payments was in surplus for a third straight quarter, while current account deficit widened but stayed within comfort.
The data comes after a report last week showed that the economy grew a faster-than-expected 5.7% in the April-June quarter, sparking hopes the election of Prime Minister Narendra Modi would usher in a period of economic renewal.
In addition, easy global monetary policies are helping push funds into emerging markets. Overseas investors bought Indian shares worth Rs5.54bn $91.53mn) on Monday, taking their total purchase to over $13bn so far in 2014.
“With steady US bond yields despite ongoing taper and most other central banks in an easing mode, the global liquidity is strong and is looking for better investment avenues in emerging markets. With domestic fundamentals on an improving trend, India is well positioned to receive global flows,” said Harsha Upadhyaya, chief investment officer-equity at Kotak Mutual Fund.
The 30-share BSE index rose as much as 0.8% to a record high of 27,082.85 before ending 0.57% higher.
The NSE index also hit a record high, rising as much as 0.92% to 8,101.95. It ended up 0.69%.
Blue-chip stocks led gains. HDFC Bank rose 2.1%, while ITC gained 1.2%.
Reliance Industries rose 1%, while Bharti Airtel gained 4.2%.
Housing Development Finance Corp rose 0.7%, while Oil and Natural gas Corp gained 1.1%.
Cipla ended 5.3% higher after marking a record high of Rs575 after launching an anti-asthma inhaler in Germany and Sweden.
Other drug makers also gained. Sun Pharmaceutical Industries ended up 2.5%, while Lupin rose 1.5%.
However, metal stocks fell on continued worries around pending top court’s hearing on September 9 about whether to cancel the allocations of coal blocks it ruled as illegal last week.
Jindal Steel and Power fell 3.2%, while Hindalco Industries lost 0.7%.
Meanwhile the rupee weakened for a fourth consecutive session yesterday, dropping the most in three weeks, tracking weaker Asian currencies amid caution ahead of key events including a European Central Bank meeting and US monthly jobs data.
Data showing the April-June current account deficit widening from the previous quarter due to rising imports hit sentiment at first, although traders later said the gap was still within the comfort zone.
Sentiment was also soothed after India’s balance of payments was in surplus for a third straight quarter in April-June.
“The overall sentiment remains bullish on the rupee so a small negative on the current account balance doesn’t matter,” said Naveen Raghuvanshi, a foreign exchange dealer with DCB Bank.
“The ECB rate meeting outcome could prove to be crucial for the rupee if they do ease policy further. The rupee is likely to hold in a 60.40 to 60.80 range in the rest of the week,” he added.
The partially convertible rupee closed weaker at 60.68/69 versus Monday’s close of 60.5250/5350. The 0.2% fall on the day, is the biggest single-day decline since August 13.
Broad gains in the dollar hurt the local unit. The index of the dollar against six major currencies was up 0.3%. Most Asian currencies too traded weaker against the greenback.