India’s benchmark indexes climbed to record levels on strong corporate earnings and gains in Asian markets.
The S&P BSE Sensex index closed higher by 190 points or 0.63% to 30,133 points yesterday for the first time, while its peer, the NSE Nifty 50 Index, advanced 0.5%. Seven out of the nine Nifty-listed companies have either met or exceeded their earnings expectations for the January-March quarter, data compiled by Bloomberg shows.
“Strong company results show that the market has broken away from the shackles of demonetisation,” Jitendra Panda, managing director at Peerless Securities in Kolkata said by phone. “This milestone for the Sensex was long-awaited and with companies displaying momentum in the numbers, we expect better days ahead.”
The Sensex traded at 17.5 times estimated 12-month earnings, the most since November 2010. Seven months of net purchases by local funds have boosted the valuations of Indian stocks to their highest level in more than six years. The India VIX Index, a gauge of expected stock-price swings, rose 1.5%, rebounding from a record low.
Out of the 13 sector indices compiled by BSE, a gauge of fast-moving consumer goods surged the most, rising to its highest level since at least 2005. ITC was the top performer on the Sensex, rising to a record high. Housing Development & Infrastructure -4.2%, Prestiage Estates Projects -4.4%, Indiabulls Real Estate -2.6%; S&P BSE India Realty Index -3% as analysts say recent rally seen excessive. Zensar Technologies -8.7%, falls most in three months after profit tumbles. Cummins India +4.4%, company to benefit from India’s power demand.
Meanwhile the rupee pared some gains but still closed fresh 20-month high against the US dollar, as traders awaits details of US President Donald Trump tax plan which is set to be unveiled. Bloomberg reports that the plan would cut the federal corporate tax rate to 15% from 35%.
Earlier, rupee strengthened past 64-mark to hit fresh high of 63.93 a dollar — a level last seen on August 10, 2015 and gained as much as 0.54% following the rally in global markets which has been sparked by a centrist victory in the first round of the French presidential election.
The rupee closed at 64.12 a dollar — a level last seen on August 10, 2015, up 0.25% from its Tuesday’s close of 64.28. The rupee opened at 64.16 a dollar.
So far this year, the rupee has gained 5.5%, while foreign investors have bought $6.49bn and $7.45bn in local equity and debt markets, respectively. The 10-year bond yield closed at 6.952% compared to its previous close of 6.942%. Bond yields and prices move in opposite directions.
Asian currencies were trading lower. China offshore spot was down 0.14%, China renminbi 0.1%, Thai Baht 0.1%, Singapore dollar 0.09%, Philippines peso 0.08%, Japanese yen 0.08%. However, Malaysian ringgit was up 0.55%, Taiwan dollar 0.22%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 99.02, up 0.22% from its previous close of 98.785.
Government bonds (G-Secs) declined on selling pressure from banks and corporates. While, interbank call money rates remained steady as demand from borrowing banks match supplies.
The 6.97% 10-year benchmark bond maturing in 2026 fell to Rs 100.08 from Rs 100.23, while its yield moved up to 6.96% from 6.93%.
The 6.79% government security maturing in 2029 dipped to Rs 97.56 from Rs 97.85, while its yield rose to 7.08% from 7.05%. The 7.61% government security maturing in 2030 eased to Rs 103.14 from Rs 103.5850, while its yield edged up to 7.23% from 7.18%.
The overnight call money rates ended stable at its previous level of 6.05% after trading in a range of 6.25% and 6.00%.
Meanwhile, Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 10.25bn in 3-bids at the overnight repo operation at a fixed rate of 6.25% yesterday, while it sold securities worth Rs 154.88bn in 46-bids at the overnight reverse repo auction at a fixed rate of 6.00% as on April 25.
Pedestrians walk past the Bombay Stock Exchange which stands partially covered by scaffolding in Mumbai. The BSE Sensex closed higher by 190 points to 30,133 for the first time yesterday.
