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Remember 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 support.
The recent turmoil in emerging markets has hit India, reversing some of the the gains and optimism from the end of last year.
Early on Tuesday, the benchmark Sensex index was down 0.7 per cent to 20,062.48 in Mumbai, adding to significant losses in the last session and hovering around the psychological threshold of 20,000. That a level not seen since last October, although it has since recovered to be flat on the day.
After the Argentine peso depreciated sharply at the end of last week, talk has begun of a wider EM rout. Once engines of growth for the global economy, emerging markets are now seen as vulnerable with signs of weakness emerging in the Chinese economy and the US Federal Reserve reeling in its asset purchase programme, adding to domestic woes.
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.
India’s Sensex share index hit an all-time high on Monday. James Mackintosh, investment editor, examines the taper and says it is unlikely to act as a big barrier to Indian and other emerging market shares.
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.
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 FT.com here.
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?
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?
India’s benchmark Sensex Index passed the psychological 20,000 mark for the first time in two years during the day’s trading on Tuesday. The index closed up 0.4 per cent at 19,986.82.