Nifty reached a new record high on Friday, after the September-quarter economic growth exceeded expectations, contributing to positive sentiments about global interest rates.
The NSE Nifty 50 index climbed 0.52% to reach 20,238.45, while the S&P BSE Sensex increased by 0.44% to 67,286.16 as of 9.35 am.
The Indian economy expanded by 7.6% in the September-quarter, surpassing the 6.8% forecast in a Reuters poll of economists and the Reserve Bank of India’s estimate of 6.5%, driven by growth in the manufacturing sector.
“India’s growth outlook remains positive, with various government capex initiatives expected to stimulate consumption at the grassroots level,” noted Pramod Gubbi, founder of Marcellus Investment Management.
The anticipation that the US has reached the peak of the interest rate cycle has led to increased investment in riskier assets such as emerging equities, particularly in India, Gubbi added.
In November, both Nifty and Sensex experienced their best month in 2023 due to the resurgence of foreign portfolio investor (FPI) inflows.
FPIs broke a two-month selling streak in November, investing in stocks worth 90 billion rupees ($1.1 billion).
Wall Street equity indexes rose, with the Dow Jones Industrial Average registering its best month since October 2022, following consumer spending data that indicated reduced demand, thus boosting the rate outlook.
Additionally, exit polls for state elections indicated a slight advantage for Bharatiya Janata Party in the key states of Rajasthan and Madhya Pradesh, while the Congress was leading in Chhattisgarh and Telangana.
“A comprehensive BJP victory will strengthen the perception that the party is well-positioned for the 2024 general elections and is likely to further rally the markets,” stated three analysts led by Madhavi Arora, lead economist at Emkay Global Financial Services.
India’s general elections are scheduled for early next year.
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