- Nifty hit lifetime highs of 10,137 in August
- Lack of alternative one of factors driving market momentum, say analysts
- Nifty has risen more than 22% so far this year
Many analysts have been voicing concern over the sharp rally witnessed in Indian stock markets this year at a time when earnings growth of corporates continues to remain weak. The GDP growth slowed to a three-year low of 5.7 per cent in the April-June quarter, decelerating from 6.1 per cent in the March quarter. Some analysts have cut their GDP growth forecast for this year. On the other hand, the benchmark for bluechip stocks, Nifty, is up over 22 per cent so far this year.
The gains in midcaps and smallcaps have been even sharper. The BSE midcap and smallcap indices have surged 32 per cent and 39 per cent respectively so far this year.
Some "Experts" predicted few mths back— sandip sabharwal (@sandipsabharwal) September 7, 2017
Mkts will fall,Dom Investors will pull out huge from MF's=Mkt Crash
Wonder what they are thinking now
So what is driving the stock market rally in India? Strong inflows from domestic institutional investors, including mutual funds as well as inflows from global institutional investors. Domestic institutional investors (DIIs) have bought stocks worth nearly Rs 70,000 crore so far this year. This strong buying from domestic institutional investors has helped provide a strong support to Nifty. For example, in August, foreign institutional investors (FIIs) sold Indian equities worth nearly Rs 12,000 crore. On the other hand, the domestic institutional investors bought shares worth nearly Rs 18,000 crore, preventing the market from falling sharply.
At one level Rs 20000Cr in a month into Equities scary— sandip sabharwal (@sandipsabharwal) September 6, 2017
What are investors expectations
What are they being promised?
Many analysts remain bullish on the prospects of Indian markets. They expect both economic growth and earnings to recover from the second half of this fiscal year. And GST, which has been launched from July 1, is expected to boost growth in the long-term. The International Monetary Fund (IMF) estimates Indian economy to grow at 7.2 per cent in 2017-18 and 7.7 per cent in 2018-19.
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