Indian markets began the year on a strong note as foreign institutional investors (FIIs) continued their buying spree, aided by positive sentiments as US lawmakers succeeded in averting the so-called fiscal cliff.
On Tuesday, FIIs bought equities worth Rs665 crore, while domestic institutions were sellers by Rs406 crore.
The benchmark Sensex gained 154.10 points, or 0.79%, to close the day at 19580.81, led by high-beta and interest rate sensitives such as real estate, metal and banking stocks.
Experts, however, played down the fiscal-cliff deal’s impact on India.
“Indian markets have been on an uptrend, with any positive news lifting the indices even as negative news is being ignored. The bulls are betting on interest rate cuts by RBI in January and input commodity prices staying lower, driving earnings growth. So, technically, it is quite possible that the markets will touch new highs before Budget,” said Anand Tandon, CEO at JRG Securities.
Saurabh Mukherjea, head institutional equities at Ambit Capital, concurred. “It’s highly unlikely that a deal on fiscal cliff won’t happen. Anyway, the US economy, especially the private sector, has been growing strongly at 3.5% or thereabouts, so there’s not much to worry as the underlying economy will be able to weather the impact.”
Indeed, going by Mukherjea, the Sensex will touch 23000 by December this year.
The experts, however, caution that local factors such as Budget and heavy issuances of fresh paper by government and corporates to meet public shareholding norms could moderate the upside.