Nifty Closes At Record High On Recovery Hopes
India’s benchmark Nifty 50 Index closed at a record high as investors bet on economic activity picking up pace after pandemic-led curbs ease and vaccinations accelerate.
The NSE gauge ended trade 0.45% higher at 15,337.25 as it surpassed its previous high set on Feb. 15 and is around 94 points away from its all-time intra-day high. The Nifty 50 has gained about 10% so far this year, outperforming the MSCI Asia Pacific Index by about six percentage points.
The optimism stems from the Indian government’s likely stimulus package for sectors worst affected by the deadly outbreak. The Finance Ministry is working on proposals to bolster the tourism, aviation and hospitality industries, along with small and medium-sized companies, people familiar with the matter told Bloomberg News on the condition of anonymity.
Technical analyst Gautam Shah, in a recent interview with BloombergQuint, said “sideways consolidation [in the Nifty] in the last three months is a textbook-style bull trend”. Liquidity is being provided through retail participation, he said. “We have laid the foundation for a move to 16,000 at least and there are immense opportunities even at these levels,” Shah said, adding he sees the Nifty moving towards the 18,500 target next year.
India has been adding record daily Covid-19 deaths even as the pace of adding new infections has slowed amid localised lockdowns across the country. But the country lags its vaccination target due to a lack of supply.
“The sharp fall in cases in key states is raising hopes of opening up of the economy,” Nitij Mangal, an analyst at Jefferies India Pvt., said in a note.
According to Sonal Varma and Aurodeep Nandi, analysts at Nomura Holdings Inc., several states are starting to announce a slow rollback of restrictions as caseloads fall, suggesting the peak hit to economic activity will be seen in May, with conditions improving in June.
“We remain positive on India’s business cycle and expect GDP growth of 9.8% in 2021,” they said in a note this week. “Our analysis of international evidence suggests that the hit to economic activity will be significantly less than what the drop in mobility suggests.”
Separately, of the 40 Nifty 50 companies that reported March-quarter results so far, 22 have missed analysts’ estimates, while 16 have beaten or met forecast.