Sensex Surges To A Record: Here’s What Dalal Street Is Saying

India’s benchmark S&P BSE Sensex index rose to a record-high, rising above the 39,000-mark for the first time, before trimming intraday gains.

Early on Monday, the 31-stock index rallied over 400 points to 39,115, before paring gains and closing 200 points higher at 38,837.

Expectations that the Reserve Bank of India will announce its second interest rate cut this year and a general election that will see Prime Minister Narendra Modi re-elected has helped lift investor sentiment. Foreign investors too have pumped over $7 billion into Indian stocks so far this year.

It took the Sensex 11 trading sessions, between March 15 and April, to go from the 38,000 mark to the 39,000 milestone. Over two-thirds of this rally has come from just five stocks.

Auto stocks were among the prominent laggards, in the Sensex’s 1,000-point rise.

Here’s what market experts are saying about the road ahead for Indian stocks:

Sensex To Hit 42,500 By 2019 End, IIFL Says

“The markets will wait for the elections and post that Sensex is expected to touch 42,500 by 2019 end,” Sanjiv Bhasin, executive vice president of markets and corporate affairs at IIFL Securities, said. “Globally, it's a bull market and we are just playing catch-up. I'm very bullish on the market and expect Sensex to touch 40,200 in near-term.”

FIIs Fuelling Market Rally, Says Dimensions

“If you look at the genesis of this rise, a gallop of money is because of what happened in the U.S. Federal Reserve,” said Ajay Srivastava, chief executive officer, Dimensions Corporate Finance Services. “There was no selling happening in the Indian market. Indian selling was over last year and foreigners wanted to buy the stock and price action was very clear.”

Expect Some Correction, Says Ajay Bagga

There could be some correction or consolidation ahead of election results in the next four-to-six weeks, Ajay Bagga, executive chairman of OPC Asset Solutions, said.

Global liquidity is driving this rally in the Indian markets, Bagga said. “This could sustain because of accommodative policy stance of global central banks and the stimulus in the global economy that is finding its way in the emerging markets like India,” he said, adding: “Would prefer investing in financials, IT and metals.”

Monsoon Progress, Poll Result Key, Says Angel Broking

“Markets’ record high level is a combination of buoyant FII inflows, expectation of victory of incumbent government and RBI’s rate action in the upcoming monetary policy to propel growth.” said Mayuresh Joshi, vice president of Angel Broking, adding that elections and rains will decide how the Sensex would progress from here.

Don’t See Much Upside, Says Marcellus Investment Managers

Pramod Gubbi, co-founder of Marcellus Investment Managers, said that he doesn't see much upside for Indian stocks.

It's a liquidity driven rally that we are currently seeing now, and this could sustain as long as there is liquidity in the global markets, he said. “However, the valuations are fair and don’t see much upside from here on.”

India To Outperform Despite Global Uncertainties, Says DSP Investment Managers

Anil Ghelani, senior vice president, DSP Investment Managers, said global macro-issues were the reason behind “price fluctuation” in key indices.

“It's important to reflect on the fact that despite uncertainties in the global context, India has seen a lot of very positive structural changes over the past couple of years which will go a long way in establishing India as one of the fastest growing economy.”

Markets Anticipating Another Rate Cut, Says Thomas Lloyd Group

Nick Parsons, head of research and strategy of Thomas Lloyd Group, said the rally was in expectation of another rate cut by Reserve Bank of India on Thursday.

“All the gains in the Indian markets have come in the last four weeks. If the currency market can respond in a favourable way and shrug off any likely reduction on Thursday, then that sets the scene for another upwards from here”.