Sensex jumps to new high on IMF forecast, foreign inflow

Heavy buying by foreign investors pushed the Sensex to a record high of 22,740.04 intra-day.

The previous all-time high was 22,620.65 logged on April 3 this year.

The 50-share NSE Nifty also flared up by 101.15 points or 1.51 per cent to end at new peak of 6,796.20. It has recorded a historic intra-trade high of 6,808.70.

“The strong economic growth forecast by IMF supported the markets. The IMF is bearish on all other emerging markets except India and it had reduced the growth forecast for the entire emerging markets to 4.9 per cent from the current 5.4 per cent level,” said a report by Geojit BNP Paribas Financial. The IMF projected a GDP growth of 5.4 per cent in 2014 and 6.4 per cent in 2015 for India.Investors also regained appetite for blue-chips, especially interest rate-sensitive banks, after indexes had retreated from previous record highs hit on April 3.

Vinod Nair, head-Fundamental Research, Geojit BNP Paribas Financial, said, “It’s the euphoria before the election outcome that’s moving the market and nobody knows how much more can come. The indices are in a new territory without any upside barrier. Now we have even started to see new money coming into the market and everyone is hopeful that post the event we will be on better grounds. Sun Pharma and banking stocks helped the market give unprecedented gains. IT stocks were the laggard due to underperformance of Nasdaq and rupee appreciation.”

Experts, however, advised investors to be cautious. “We continue to maintain that, in the short term, markets will continue to be volatile at the current levels with a positive bias. Focus will shift to growth, interest rates and valuations once the political event is out of the way. Valuations are above the long term average and there is a possibility of sub-normal monsoons. These can act as headwinds for the markets in the medium term,” said Dipen Shah, head – Private Client Group Research, Kotak Securities.