Fri. Mar 29th, 2024
BSE Sensex

Benchmark indices continued to surge upwards and closed trading on all-time record highs for three successive days, indicating growing confidence by investors in the economy despite several hurdles.

While BSE Sensex led the charge northward to close Thursday’s trading 178 points up at 35,260, NSE Nifty rallied to its best ever tally of 10,817 after surging through by a 28-point increase.

The unprecedented upward movement was triggered largely by factors such as the government’s decision to consider raising foreign direct investment limits in private banks from the current 74% level to a full 100%. This announcement received big thumbs-up from the markets and bank stocks rallied strongly in response, with HDFC and Kotak Bank emerging as winners.

Another reason to cheer came on Wednesday when the Finance Ministry decided to curb its additional borrowings from the previously planned Rs. 50,000 cr. to Rs. 20,000 cr. this year. Investors saw this move as a positive sign of the fact that the Narendra Modi government will maintain fiscal discipline and will not resort to unnecessary sops this year keeping the 2019 general elections in mind.

Despite all the optimism looming around, there still remain causes of concern which could derail growth in the upcoming days. Rising crude oil prices, for example, coupled with interest rate hikes by several foreign central banks, have resulted in alarm bells ringing in the global markets.

But none of those problems are expected to cause great damage back home, as experts say that the Indian economy is still on track to touch at least 7.5% GDP growth this year. This is because increased focus by the government on specific issues relating to business has yielded results in the form of manufacturing and exports surging in the past few weeks.

While markets are expected to continue their rallies in the upcoming days, especially in anticipation of the Union Budget to be announced next month, it will be interesting to see just how long investors can cling on to their optimism.

By dhruv