Markets at All-time High, Rupee at 2-Yr High on Hopes of Stability, Reforms
India's benchmark BSE Sensex rose as much as 0.4 percent to hit a record high on Wednesday, surpassing its previous milestone hit in March 2015, while the rupee hit a 20-month against the dollar.
File photo/People look at a screen displaying the Sensex on the facade of the Bombay Stock Exchange (BSE) building in Mumbai. (Image: Reuters)
Mumbai: Indian stock markets, including the Sensex and the Nifty, scaled an all time high and the rupee was trading at its strongest level in two years on the domestic cues of continuing market reforms and political stability.
The reasons for market exuberance are not difficult to fathom.
The BJP looks set to sweep all three municipal corporations in Delhi. This comes on the back of the massive verdict in Uttar Pradesh last month, which the markets are interpreting as a period of political stability in the Centre and the states. Political stability lends itself well to economic reforms, such as the Goods and Services Tax, bankruptcy code bill and agricultural, banking and labour reforms.
FII inflows are investments by foreign institutions - including hedge funds, pension funds, insurance companies, mutual funds and banks - in Indian stocks and currency. Large FII inflows can help balance the perpetual current account deficits that India runs, thus lowering depreciator pressure on the rupee.
“A lot of the market exuberance right now has to do with hopes that the business environment in India will improve because of political stability and market reforms,” Rajesh Srivastava, the Chairman and Managing Director of Rabo Equity Advisers, told News18. “FIIs are investing in India because of the perception that the states and the centre are now on the same page,” he added.
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