MUMBAI: Nifty and Sensex benchmarks scaled new peaks following optimism generated by the last week’s interest rate cut by the Reserve Bank of India even as the International Monetary Fund made its steepest cut to its global growth outlook in there years, and potential uncertainty from elections in Greece impending.
The IMF cut its forecast for the global economy to 3.5 per cent for 2015 from 3.8 per cent growth it predicted in October. IMF also cut its forecast for 2016 to 3.7 per cent from its earlier projection of 4 per cent.
For India, it expects growth at 6.3 per cent in fiscal to March 2016, and 6.5 per cent in the following year to overtake China in that year. China’s growth slipped to a two-decade low of 7.4 per cent in 2014.
Sensex gained 1.85 per cent or 522.86 points to 28,784.67 points after rising to as high as 28,829, its all-time high.
Likewise Nifty, rose to 8,695. Almost 200 stocks rose to their 52-week high.
Some of them included Axis Bank, HDFC Bank, HDFC, ICICI Bank, Yes Bank, Tata Motors, United Spirits and Bosch. “Markets touched all-time high on both global as well as local investors huge buying,’’ said Motilal Oswal, chairman of Motilal Oswal Financial Services. “There is a left-out feeling amongst domestic investors who are hugely underweight on equity as an asset class.’’
Global brokerage firm CLSA named India as its top pick among emerging markets. CLSA said in a note to clients that it has witnessed heightened interest from global funds which are as yet significantly under-positioned in India.
Yet, locally analysts caution investors to be selective as stocks are no longer offering worthwhile upside.
“It’s a surprise rally in spite of important global events slated to happen this week. All EM’s have rallied higher expecting further QE from ECB, which will strengthen their economy and stabilise commodity prices,’’ said Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services Ltd.
“Given the strong rally in the last few trading days we suggest to be cautious in the near term as actual decision are taken and digested (ECB meet, Greece vote). It’s true that as global concerns are handled, India can look ahead for new reforms and budget expectation.’’
Economies across Europe, China and Japan face uncertain short term growth prospects and any erosion in wealth there could also affect demand for Indian products. It also raises threat of companies unable to sell their dumping their goods on India and hurting local companies.