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Bulls do a rain dance as indices hit new records

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Mumbai: India’s equity benchmarks closed at a record on Tuesday, with the Nifty crossing 11,800 following the forecast of a near-normal monsoon by the weather department and a strong start to the earnings season.

The Sensex rose 0.95 per cent to 39,275.64 points at the close after hitting an all-time high of 39,364.34 while the Nifty climbed 0.8 per cent to close at 11,787.15. The 50-stock index set a new intraday high of 11,810.95. The Bank Nifty index also hit a lifetime high of 30,590.95 points before ending up 1.4 per cent at 30,531.35. There was an element of nervousness, though — the India VIX volatility gauge ended up 2.3 per cent at 21.87 after crossing 22 intraday for the first time since October 31 last year.

IndusInd Bank gained the most on the Sensex, ending 4 per cent up. ICICI Bank, Oil & Natural Gas Corp, Larsen & Toubro, Maruti Suzuki India, Asian Paints and Bajaj Auto gained 1.3-3.6 per cent. Infosys lagged for the second consecutive day after guiding for lower profits in FY20 and ended down 0.4 per cent.

“The monsoon is expected to be near normal, foreign investors continue to put in money, markets are looking technically strong and the election outcome is expected to be stable,” said Shiv Diwan, co-head, institutional equities, Edelweiss. “Given these factors, the Nifty may come closer to 12,000 in the April series.”

Nifty forms golden cross

The June-September rainy season is crucial to India’s farm output and the country’s broader economic wellbeing, particularly with growth under pressure.

The Nifty has formed a so-called golden cross on the technical charts, which suggests continuation of market strength, analysts said. A golden cross is formed when a stock or an index’s 50-day, short-term moving average goes past its 200-day moving average.

The Nifty has gained 9.2 per cent and Sensex has risen 9.5 per cent since the beginning of March, primarily due to strong overseas investment flows into emerging markets and opinion polls suggesting that the BJP-led coalition will return to power after votes in the ongoing national poll are counted on May 23. Foreign portfolio investors (FPIs) bought Indian shares worth a net Rs 1,038.6 crore on Tuesday while domestic institutional investors (DIIs) bought local shares worth Rs 37.2 crore, according to provisional data. However, the FPI figure is much less than what it was in March. FPIs have pumped Rs 5,800 crore into Indian equities so far in April, including provisional data for Tuesday. That compares with Rs 42,600 crore in March. DIIs have been net sellers to the tune of Rs 936 crore in Indian markets so far this month.

Some market experts said a BJP win is more or less priced in but others believe there is more upside left. The BJP-led government’s response to the Pulwama terror attacks has helped the party’s prospects of retaining power, said market participants.

“The market undertone and liquidity have been strong. Some of the expectation around election outcome has been priced in but it cannot be said if it is fully priced in,” said Harsha Upadhyaya, chief investment officer, equity, Kotak Mahindra Asset Management Co.

Source: Economic Times