Sensex rallies 6% in six days, tops 29K

Financial stocks lead the gains; Nifty, too, hits new peak for third day

The benchmark Sensex breached the 29,000-mark on Thursday for the first time, led by robust inflows from investors abroad. The index has rallied six per cent or 1,659 points in the six trading sessions from January 15, when the Reserve Bank of India unexpectedly eased key policy rates by 25 basis points. The 30-share Sensex gained 117.16 points or 0.4 per cent to 29,006.02; the NSE Nifty ended at 8,761.40, up 31.9 points, also 0.4 per cent.

Foreign institutional investors have pumped about $1.2 billion since the cutting of interest rates by the central bank. Foreign investors, the biggest non-promoter shareholders in the market, have been raising their bets on India, forecast to be the fastest growing major economy by March 2017 by the International Monetary Fund. It has said the economy will grow at 6.5 per cent in 2016-17, higher than China’s projected 6.3 per cent.

Taking notice of this forecast, marquee investors like global pension funds and long-only funds are looking at India with renewed interest, say market players. “The market remains upbeat, given the global attention,” said Amar Ambani, head of research, IIFL. “The mood remains optimistic, on the back of steady FII inflows and hope of reforms in the coming Budget.”

Financials’ shares, considered a play on economic growth, have led the rally of the past six days. The country’s biggest mortgage lender, Housing Development Finance Corporation, has gained 14 per cent since January 15, followed by ICICI Bank (9.5 per cent), Larsen & Toubro (9.58 per cent) and HDFC Bank (six per cent).

Most global markets on Thursday traded with gains, on hope that the European Central Bank would announce a large quantitative easing package.

Sun Pharma (3.65 per cent up), Axis Bank (3.3 per cent) and Tata Motors (2.7 per cent) were the top performing Sensex stocks on Thursday. NTPC and Reliance Industries, which lost a little over two per cent each, were the biggest losers.

In the past six days, however, barring Hero MotoCorp and Tata Consultancy Services, all Sensex components have moved up. The benchmark index breached 28,000 for the first time in November last year. It has taken another 50 days to 29,000. Most foreign brokerages expect it to touch 33,000 by end-December.

“Our bullish stance on the Indian market for this year is based on our high conviction view that the improvement in macro environment over the past year is durable and will improve further. The lagged effect of the much-needed complete overhaul of the political economy is a significant tailwind,” said Prabhat Awasthi, managing director and head of equity research, Nomura Financial Advisory, in a report dated January 19.

Nomura has set a 2015-end target forth Sensex at 33,500, implying 15 per cent growth from current levels.