India equities

India’s stock markets have been powering ahead after the election win of Narendra Modi. James Crabtree explains to James Kynge the technical reasons why the rally may go on but how its sustainability depends on Modi delivering his promised structural reforms.

Jimmy Choos under your sari and an African safari for the Diwali long weekend?

A new report by Kotak Wealth Management and Ernst & Young – Top of the Pyramid 2014 – finds that India’s super rich are “ready for change” as a strong new government comes to power in New Delhi – and they’re spending to prove it.

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India Elections

By Saurabh Mukherjea of Ambit Capital

Of the eight elections that India has seen since 1984, seven have produced positive stock market returns during the following two years. Even more spectacularly, the average one-year and two-year post-election returns for the Sensex are 46 per cent and 27 per cent respectively. The two year return is a Compound Annual Growth Rate (CAGR) figure.

Since the Sensex’s 30-year CAGR (1984-2014) has been 16 per cent and since the two-year post-election CAGR is 27 per cent, simple arithmetic suggests that the two years following general elections have driven over 75 per cent of the Sensex’s returns in the last 30 years. Read more

Shares in Infosys, the Indian IT bellwether, dropped sharply on Thursday morning after senior management tempered hopes for growth in the current fiscal year and warned that the company was facing several challenges.

The stock was down 8.4 per cent by 2 pm in Mumbai at Rs3,364. Read more

India ElectionsRemember that note from Goldman Sachs? The one where the US investment bank upgraded its assessment of the Indian economy on hopes that Narendra Modi, the pro-business prime ministerial candidate for the opposition Bharatiya Janata Party (BJP), would lead India’s next government?

Then, New Delhi was up in arms and accused Goldman of interfering. Now, it seems Goldman was only saying what all investors were thinking. Indian markets closed at record highs on Thursday and again on Friday, after the Election Commission announced dates for the voting and opinion polls showed Modi gaining popular supportRead more

The first official day of electioneering in India, after the Election Commission announced dates and details for the polls. The benchmark Sensex index hits an all-time high. Read more

As the opposition Bharatiya Janata Party, with its pro-business stance, raced ahead in state elections last week and a slew of good economic data was released, India’s equity markets boomed and the benchmark Sensex index reached a new record high on Monday.

Is this different to previous peaks in the Sensex? Perhaps. A quick dig through the numbers shows that Indian equities are better value now than during previous highs. Read more

India’s benchmark equity index is nearing its all-time high and the volatile rupee is the strongest it has been against the dollar in weeks. Part of the explanation lies in exit polls released this week which suggest that the opposition Bharatiya Janata Party (BJP) may do well when results for five state elections are announced on Sunday.

But how important are these results and what can we expect from the markets in the coming months? Read more

Sensex 2003-13, Source: BSE

The Sensex hit an all time high on Friday, reaching 21,293 and exceeding its previous high of 21,206 set during the stock market boom of 2008. Read James Crabtree’s story on hereRead more

Source: Reuters

The Sensex, India’s benchmark index, has gained more than 5 per cent in the past month, approaching a three-year high.

The rally in equities is partly to do with the start of the earnings season on October 11. Corporate results for the quarter ended in September have been good so far – but is this optimism a bit early? Read more

Investors have given a thumbs up to Fortis Healthcare, the Indian hospitals chain, after it announced plans on Monday to sell its private clinic network in Hong Kong to Bupa.

Shares in Fortis rallied 6.5 per cent on Tuesday morning before moderating to close up 0.7 per cent at Rs105.25. Read more

Indian bank stocks fell heavily again on Wednesday in the aftermath of moves by the Reserve Bank of India to tighten liquidity, hit by concerns about a rise in the cost of funding, writes James Crabtree.

Private institution Yes Bank was the hardest hit by plans announced late on Tuesday by the central bank to augment last week’s measures aimed at siphoning money from India’s economy to underpin the rupee, which has fallen to record lows.

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In March, India’s benchmark Sensex index was promising to rise above 20,000 points. In May, the Nifty index breached its own high-water mark of 6,200 points. How the mighty have fallen.

By lunchtime in Mumbai on Friday, the Sensex was at a meager 18,765 while the Nifty hovered around 5,675. But how much further will Indian markets fall? Read more

Have investors overreacted to the latest news of the end of the US Federal Reserve’s quantitative easing programme? One Indian brokerage, Ambit Capital, reckons they have. In a note on Thursday, it says the sell-off is a buying opportunity and expects returns on Indian equities to rise in tandem with yields on US Treasuries.

How so? Read more

Ratings agency S&P has warned that the chances of India’s sovereign credit being downgraded to junk is more than one in three, as the economy battles with unsustainable current account and fiscal deficits.

But foreign institutional investors (FIIs) see reasons for cheer as growing inflows send Indian equity markets soaring. On Monday, India’s benchmark Nifty index surged 31 points to 6,229.45, its highest since November 2010. The Sensex too gained 163 points to 20,443.62, its highest since January 2011. Both indices have gained in every session in the past week. What’s going on? And will this rally last? Read more

What’s going on with Indian IPOs? Poor demand, increased competition for retail investment or bad news from companies that went before?

Whatever the reason, fundraising via initial public offerings in the 2012-13 year has been rather flat in India. Companies raised just over Rs60bn ($1.1bn) via IPO in the fiscal year just ended – that’s an increase of only 4 per cent year-on-year, according to stock exchange data seen by the Press Trust of India. Read more

Dubai skylineBanks and investment companies are increasingly targeting the United Arab Emirates to attract funds into Indian equities as they seek to capitalise on its large population of wealthy Indians and close trade links, writes Camilla Hall.

Natixis global asset management launched a new Indian equity fund in the UAE last month while Dubai’s Gold & Commodities Exchange set up a new derivative to allow investors to track India’s stock market. Read more

In the middle of January, India’s benchmark Sensex index touched the psychological 20,000 mark. It has since tumbled, closing at 19,271.35 on Wednesday dragged down by profit-taking, pessimism and a disappointing government budget. Read more

Shopping centre, Gurgaon. Photo: Bloomberg

Some 31 per cent of India’s 1.2bn people live in towns and cities according to India’s 2011 census, up from 28 per cent in the 2001 census.

Now the process of urbanisation is speeding up and it is tier 2 and tier 3 cities that are leading the way, argue Sheela Rathi and colleagues at Morgan Stanley in a report published this week.

It’s a theme that will affect businesses, investors and policymakers alike. Read more