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It took 22-years for Nifty to hit 10000 mark

Bulls manage to cross the magical mark on Nifty on reforms and monsoon hopes

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A historic day, which the Indian financial markets have earned the right to celebrate on the back of inherent strength in the domestic economy ably supported by ample liquidity, structural reforms like goods and services tax or insolvency and bankruptcy code with some little support from the rain gods.

That's how the market participants, investors and all other stakeholders euphorically described the conquering of the 10000 peak by Nifty and 32000 by Sensex.

"The markets are factoring in corporate earnings growth followed by good monsoon and enhanced transparency with the implementation of GST. The valuations are above mean, but we are still away from the frothy valuations seen in 2007-08," says Arun Thukral, MD & CEO of Axis Securities.

The 10,000 mark was crossed in the early hours of trade but for a brief period of time following which the index touched a low of 9949.65 at 1 pm during a day of wild swings ending at 9964.55 almost flat indicating profit booking and some nervousness.

"Profit booking at higher levels pulled the market to mild correction due to psychological effect, muted Q1 results for midcaps and awaiting tomorrow's US Federal Reserve's meet," Vinod Nair, Head of Research, Geojit Financial Services said.

So, is the party over? Not likely as most believe market still has some steam left.

"We expect the investor confidence to continue supported by ample liquidity, expectation of improvement in economy, reforms, etc. Overall, we continue to maintain a positive outlook on the markets," Vaibhav Agrawal, head of research at Angel Broking, said.

The hope of RBI delivering a rate cut after inflation has slowed to multi year lows is another reason which might keep fueling the market.

"Icra anticipates that the Monetary Policy Committee of the Reserve Bank of India would reduce the repo rate by 25 basis points in the upcoming policy review in August 2017," the rating agency said in a report today.

The ratings agency also said the RBI might undertake to manage the prolonged liquidity surplus.

The long-term story remains bullish for the Indian market.

International Monetary Fund has retained its growth projection for India at 7.2% in 2017-18, slightly up from 7.1% in the previous year and is expected to accelerate to 7.7% in FY19.

"Indian economy would still be the fastest growing amongst the large economies & will have more than double the average global growth rate of 3.5% in 2017 and 3.6% in 2018," Anita Gandhi, whole-time director at Arihant Capital, said.

...& ANALYSIS

  • The markets are factoring in corporate earnings growth followed by good monsoon and enhanced transparency with implementation of GST
     
  • Profit-booking at higher levels pulled the market to mild correction on muted Q1 results for midcaps
     
  • Investor confidence is expected to continue on ample liquidity, expectation of improvement in economy
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