What Market Veterans Have To Say About Sensex Hitting A Record High
The Sensex rose 300 points, or 0.73 percent, during the day to hit an all-time high of 40,355.
India’s equity market touched a record high today as a recovery in corporate earnings on lower taxes and easing trade war tensions cheered investors.
The Sensex rose 300 points, or 0.73 percent, during the day to hit an all-time high of 40,355, surpassing its previous record of 40,312.07 on June 4. The benchmark index is currently trading 0.66 percent higher at 40,307.10.
Here’s what the street has to say...
‘India Is Not An Overheated Market Yet’
Favourable macro conditions such as low inflation and earnings recovery in the offing could drive the benchmarks further, according to Chakri Lokpriya, managing director at TCG Asset Management.
The bigger picture is from Lehman moment to present, Sensex is just up 14 percent and the mid-cap index is up 15 percent. That compares with the U.S.’ S&P 500 moving 12 percent and Nasdaq’s 16 percent rally. This tells you India as an emerging market has delivered more or less the same returns as the world’s largest economy. It tells you India is not an overheated market and therefore we are moving higher over the next several months.Chakri Lokpriya, Managing Director, TCG Asset Management.
The rally, he said, will be led by cyclical sectors such as banking, infrastructure and consumer discretionary.
‘Pizza And A Bully’
Market veteran Basant Maheshwari cautioned that only certain quality large caps could sustain in the long run and not all 5,000 companies could perform well at once.
“The problem again is except of handful of quality companies I don’t see anything else doing well. 5 percent GDP growth is like small children competing with a big bully and saying I need my share of pizza. The big bully (large caps) is going to keep everything for himself and the small children won’t get anything.”
Also, “panic buying” from foreign institutional investors to drive the next leg of rally, said the co-founder of Basant Maheshwari Wealth Advisers.
‘Contributing Factors Moving In Positive Direction’
The corporate tax cut and easing tensions between the U.S. and China fueled the rally in Indian stocks, according to Dhananjay Sinha, head of strategy and chief economist at IDFC Securities.
You are coming out of an intense-stress level in terms of the outlook of the economy and there are contributing factors moving in the positive direction. One is the government’s measures to boost growth and second, the U.S.-China trade talks moving in the right direction. So there is ebbing of fear from a global standpoint, too.Dhananjay Sinha, Head (Strategy) And Chief Economist, IDFC Securities
Sinha prefers automakers and consumer discretionary for the long term.
Watch | The market veterans speak on what factors may have helped the Sensex touch a record high...