Mumbai: The equity markets posted yet another record high on Monday as a recovery in rupee and a rally in global stocks triggered fresh buying in frontline stocks.
The global risk appetite was higher on hopes that the discussion between US and China this week would help ease trade tension between both the partners.
Nifty zoomed past the psychological 11,500 level soaring 81 points or 0.71 per cent to end the day at 11,551.75 while the Sensex closed the session at 38,278.75, up 330.87 points or 0.87 per cent.
The sentiment in the forex market was also up with the rupee appreciating 0.48 per cent to close the session at 69.83 a dollar from its previous sessions close of 70.16.
“India has been remarkably resilient in the recent emerging market (EM) turmoil driven by macro stability, low policy uncertainty, improving growth and domestic flows. India’s policy environment has defied expectations and remained relatively benign despite the coming elections in 2019. Macro stability is strong backed by a central bank committed to keeping real rates positive,” said Morgan Stanley in a note to its clients.
According to it, India’s yield curve is undergoing bullish steepening, which is positive for stocks.
“Compare this to say the US where the bond markets are pointing to a recession in the coming quarters. The equity/bond multiple is breaking its post 2010 range (when India’s earnings recession started) to the upside suggesting that the equity market is gaining conviction in the growth cycle,” it said and added that a recovery in emerging markets could end India’s out-performance.
According to the provisional data released by the stock exchanges, foreign portfolio investors (FPIs) offloaded shares worth '483.04 crore on Monday.
“Companies have delivered earnings growth in what can be argued were quite adverse circumstances with EM stress, trade war protectionism, volatile and rising crude oil prices. With robust earnings expectations for the second quarter, the market is likely to continue to be bought on weakness,” said Sunil Sharma, chief investment officer (CIO), Sanctum Wealth Management.
