Sensex, Nifty Headed For All-Time Highs; Pharma May Outperform: Expert
The S&P BSE Sensex gained 0.4% to 29,045, its highest level in 18-months.
Indian equities climbed to an 18-month high as investors lapped up shares of auto makers and pharmaceutical firms and dumped information technology stocks after TCS warned of a slowdown in the second quarter.
The S&P BSE Sensex gained 0.4 percent to 29,045, its highest level in 18-months. The NSE Nifty advanced 0.4 percent as well to close above the 8950-mark for the first time since March 3, 2015.
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The market breadth was encouraging at 991 advances, 628 declines and 237 stocks changed.
“Value buying remained visible, arresting declines. SIAM’s higher growth revision kept auto stocks firm,” Anand James, chief market strategist at Geojit BNP Paribas Financial Services said in an email statement.
Indian stocks extended the longest run of monthly gains in two years as foreigners bought $210 million of local equities this week, taking the year’s inflow to $6.3 billion, the most in Asia after Taiwan and South Korea.
The rally has left the Sensex trading at 16.7 times projected 12-month earnings, its most expensive level since January 2011 and higher than the five-year mean of 14.4, according to data compiled by Bloomberg.
“There could be a correction here and there, but it won’t last for long. Equity benchmarks are on course for their all-time highs after which there we could see a period of consolidation,” Sharmila Joshi of sharmilajoshi.com told BloombergQuint in a phone interview.
Investors should stay with a “buy on dips” strategy, Joshi said, adding that two-wheeler makers and pharmaceutical companies could do well going forward.
IT Continues To Log Losses
The S&P BSE IT Index was the worst performing sectoral gauge on Thursday. In fact, the 56-member index has retreated 8.1 percent this year, while the Sensex has rallied 11 percent to near its March 2015 all-time high.
IT will go through a phase of a low growth for a couple of quarters, Joshi said, “I would use this as an opportunity to buy some of the big IT names like Infosys, TCS, HCL Tech and Tech Mahindra.”