The BSE Sensex and the NSE Nifty, two benchmark stock indices, rose Monday after a sharp decline on Friday as global markets rallied in tandem with Friday’s Wall Street rise and as GDP growth data for the December quarter matched Street forecasts. Additionally, February auto sales statistics for a few auto players above expectations, which improved investor sentiment. The stocks that made the most contributions to the index increases were Infosys Ltd., Larsen & Toubro Ltd., Mahindra & Mahindra Ltd., and Bharti Airtel Ltd.
India’s GDP grew 6.2 per cent in the December quarter from 5.6 per cent in the September quarter, in line with consensus but above Nomura’s expectations. HSBC noted that a string of past GDP prints was revised up, suggesting strong growth momentum in the economy. The December quarter GDP grew in line with expectations despite the same quarter last year’s growth being revised up by 0.9 percentage points, it said.
Also, strong agricultural growth in the December quarter means that the summer crop was good. Besides, private consumption data for the first three quarters of the year has been higher than last year, which over time, can be positive for investment.
Sensex stood at 73,593.26, up 395.16 points or 0.54 per cent. Nifty was trading at 22,243.85, up 119.15 points or 0.54 per cent. In Asia, most markets were trading higher, with the Japanese Nikkei at 1.4 per cent climbing the most.
The main triggers for the recent sustained FII selling in India have been the high valuations and the attractive US bond yields. These important macros are undergoing a slow shift.
“Largecap valuations are now fair and in segments like financials attractive. US 10-year bond yields have declined to 4.21 per cent. So, there is a possibility of FIIs reducing their selling, going forward. There is good news on India’s growth front. The correction in the market is an opportunity for long-term investors to buy high quality stocks,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
The February auto sales numbers also showed strong performance from M&M and Eicher. Vijayakumar said it is difficult to predict when the market will bottom out. But this is the time to start buying without bothering about the near-term volatility, he said.
