A day after the Sensex at BSE and Nifty at NSE fell by around 0.9 per cent in line with the decline in global market following concerns over growth, the Sensex and Nifty staged a strong recovery on Tuesday as the overall bullishness on Indian markets and fundamentals remain intact.
The Sensex rose 424 points to close at 38,233 and Nifty gained 129 points to close at 11,483 on Tuesday.
What is the reason for this surge?
The rise in Indian markets over the last month and a half has not only been supported by the domestic investors but also foreign portfolio investors who have pumped in over Rs 46,000 crore into Indian equities since the beginning of February.
Is there need for caution, given the general trend of pre-election rallies?
While the economic fundamentals remain intact, analysts advocate some degree of caution. “While some of the domestic/global uncertainties may have abated, one still needs to be watchful,” Citigroup Inc. analyst Surendra Goyal said in a report published March 20. An index by Citigroup that tracks sentiment suggests a neutral stance, the note said.
“We have to wait until the election is over,” said JPMorgan Asset Management Chief Market Strategist Tai Hui at a press briefing in Hong Kong on March 21. “The election results can swing the market quite violently. I’m quite happy to sacrifice a little bit and move into India when the results are out.”