Markets scale fresh highs, Nifty closes above 18,000 for 1st time

By Nasrin Sultana
The Sensex closed at 60,737.05 on Wednesday.

MUMBAI : Markets scaled fresh highs on Wednesday despite inflation woes denting global investor sentiment. The Nifty closed above the 18,000-mark for first time ever. The 50-share index was up 169.80 points or 0.94% at 18,161.75. The Sensex was up 452.74 points or 0.75% at 60,737.05.

Markets in other Asia-Pacific region were mostly mixed with shares in mainland China and Korea rising 0.4-1%. Trading in Hong Kong was cancelled because of a typhoon warning alert. “The mood of the global market is muted by inflation fears and high bond yields ahead of the release of US inflation data. However, Indian markets are robust because of the festival season," said Vinod Nair, head of research, Geojit Financial Services.

Strong macro-economic recovery in India has boosted confidence about equities, analysts said. September retail inflation dropped to 4.3% from 5.3% in the previous month, while August index of industrial production expanded 11.9% year-on-year (y-o-y), which is a moderate acceleration from 11.5% y-o-y in July.

“While the festive season and unlocking gains may support demand in the near term, exports remain key to outlook. Accordingly, softening global growth momentum and lingering supply bottlenecks could be a dampener in the short run," said Edelweiss Securities. Analysts at Edelweiss Securities expect the Reserve Bank of India (RBI) to continue to maintain an accommodative stance to support growth, especially when the fiscal impulse is fading and economic recovery is still uneven. “An attempt by RBI to contain any supply-led rise in inflation will prove unfruitful and instead start weighing on economic growth," it said.

Even as Indian markets are on the rise, foreign institutional investment inflows into equities have slowed down to $100.6 million in October from $1.13 billion last month. Domestic institutional investors, including mutual funds and insurance companies have pumped in 2,471.69 crore so far in the month from 7,236.72 crore in September.

Cost pressures because of higher commodity prices and rising freight costs are likely to be visible in corporate earnings in the next couple of quarters, said analysts at Credit Suisse Wealth Management, India.

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