Stock markets soared to another record on Friday amid widespread investor optimism after the August services PMI rose to its highest in 18 months.

The BSE Sensex closed above 58,000 for the first time, with the 30-share index gaining 277.41 points, or 0.48%, to 58,129.95. The Nifty rose 0.52% to 17,323.60.

The stocks’ performance was backed by favourable global cues and positive domestic economic data, said Vinod Nair, head of research at Geojit Financial Services.

“Anxiety over the Jackson Hole symposium subsided due to the dovish tone of the Fed chair, which helped global markets to start the week on a strong footing. The positive sentiments in the domestic market remained throughout the week as domestic economic data releases were in favour of bulls. Strong domestic economic numbers are supporting the upward movement in the market even in these high levels of valuation,” Nair said.

Up, Up and Away

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Up, Up and Away

India’s August services sector activity expanded for the first time in four months, recording the fastest growth in one-and-a-half years, market information provider IHS Markit Ltd said on Friday.

The seasonally adjusted India Services Business Activity Index surged to 56.7 in August, up from 45.4 in July, IHS Markit said, adding that this was the first time it had crossed the 50 mark that separates expansion from contraction in four months.

Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services Ltd, said liquidity in the domestic market has been strong for the past couple of days. The markets are likely to continue with the positive momentum as economic recovery and vaccination continue to improve.

“However, valuations are also moving beyond comfort zones and, hence, could lead to bouts of profit booking and increase in volatility. Large caps offer a better margin of safety in the current environment and could continue to remain in focus in the near term as well,” Khemka added.

The India volatility index (VIX) increased over 2% to 14.54, indicating increasing anxiety and nervousness among investors.

Analysts at BofA Securities said exports could complement the domestic capex upcycle. “Management commentaries already show early signs of a likely pickup in export traction, with most major economies globally having rebounded ahead of domestic market recovery and have plans of pursuing large capex programmes,” they said in a note on Friday.

Markets in other most Asia Pacific countries were also higher. Shares in Japan jumped after Prime Minister Yoshihide Suga said he will not be running in the upcoming party leadership election. The Nikkei closed 2.05% higher while Hong Kong’s Hang Seng index shed 0.72%.

The Indian rupee settled with a marginal gain of 4 paise at 73.02 against the US dollar on Friday.

At the interbank forex market, the local unit opened at 73.05 against the greenback and witnessed an intra-day high of 73.01 and a low of 73.15.

PTI contributed to the story.

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