Sensex hits record high; US seeks ‘talk and trade’ to rebuild India ties
The BSE sensex hit a record high while the NSE index closed just off its all-time high, as steady buying by foreign investors continued to drive a rally in blue chips such as ICICI Bank.
The BSE sensex’s record high of 21,525.14 surpassed its previous historic milestone of 21,483.74 hit on December 9 last year. Nifty ended only 0.2 percent off its record of 6,415.25 hit on the same date.
The strong rally has defied expectations that foreign investors would grow more cautious as the Federal Reserve continues to withdraw its monetary stimulus and ahead of the general election set to kick off on April 7.
Instead, overseas investors have bought heavily into India as a sharply narrowing current account deficit and a more stable rupee have increased confidence in a country that only last year was in the midst of its biggest market turmoil since the balance of payments crisis of 1991.
Overseas investors bought Indian shares worth $119.46 million on Wednesday, extending their buying streak to a 14th consecutive day for a net of about $900 million, provisional exchange data showed.
“It’s a little more than what we had really expected. Pre-election run up is helping but some short term correction is possible,” said Paras Adenwala, managing director at Capital Portfolio Advisors.
The BSE index rose 1.11%, or 237.01 points, to end at 21,513.87, having gained 4.9% since the start of February.
The NSE index gained 1.15%, or 72.50 points, to end at 6,401.15.
The rally comes at a time when foreign investors have been buyers of Indian shares for 14 consecutive sessions for a net total of about $900 million.
India is the only share market after Indonesia to turn positive for the year among the “Fragile Five” economies, or those countries whose large current account deficits were seen as making them particularly vulnerable to foreign outflows.
In India, the current account deficit has narrowed sharply, to 0.9% of gross domestic product in the October-December quarter, according to data on Wednesday, improving sharply from the record high of 4.8% of GDP in the year ended in March 2013.
The improving current account deficit, and the strong foreign inflows, have also boosted the rupee, which is up 12.2% since hitting a record low in late August.
Blue chips have been the main drivers of the rally. On Thursday, ICICI Bank gained 3.1% andReliance Industries rose 1.9%.
The gains were widespread with the BSE mid-cap index rising 1.21%, including a 3.6% gain in Crompton Greaves.
The small-cap index ended up 1.22%.
Shares that are part of billionaire Anil Ambani’s group were also noticeable gainers: Reliance Infrastructure rose 9.9%, while Reliance Power gained 5.2%.
Among stocks that fell, AstraZeneca Pharma India plunged 9.2% after its board late on Wednesday deferred a proposal to delist the company.
Tata Motors also fell 0.3%, adding to Wednesday’s 0.8% loss, on profit-taking after marking its record high of Rs 420.70 on Tuesday.
US seeks “talk and trade” to rebuild India ties
The United States sought on Thursday to rebuild rocky ties with India, while stressing it would tackle differences “head on” in pursuit of its drive to quintuple bilateral trade in a decade.
Rows over drug patents, solar panels and software piracy have blighted relations of late, amid heated exchanges over the arrest and strip search in New York last December of an Indian diplomat who was suspected of visa fraud.
That spat forced a trip to India by assistant secretary of state Nisha Biswal, Washington’s point person for South Asia, to be rescheduled. Visiting New Delhi after a two-month delay, she focused on finding ways to agree.
“Like any trading partners, we do have our differences, but the willingness to talk about them indicates that we are indeed confident, mature partners,” Biswal said in a speech to an invited audience.
President Barack Obama wants to bring about a strategic “rebalancing” towards Asia and expand trade with the region of more than 4 billion people that Washington believes could account for half of global economic output by 2050.
Vice President Joseph Biden, on a visit to India last year, called for bilateral trade to grow fivefold over the next 10 years to half a trillion dollars. That is roughly the size of last year’s US trade deficit.
Relations have remained fraught, however, with India’s trade minister accusing Washington of “very high and unacceptable protectionism” on the day that Biswal arrived in the country.
The ruling Congress party government does not want to be seen as bowing to US pressure on trade ahead of a general election that starts on April 7 and that, according to opinion polls, it is likely to lose.