MUMBAI: India’s benchmark stock index raced to a record high as foreign investors bought shares on hopes that a new pro-business government would emerge from elections which start next month.
The Bombay Stock Exchange’s (BSE) benchmark index gained 1.06 percent to touch a lifetime high of 22,040.72 points in morning trading, before closing at 21,832.61 points, 0.10 percent higher than Monday’s closing.
The momentum in markets could last until April with election results in May providing the next set of cues, analysts said.
India’s Hindu nationalist Bharatiya Janata Party led by business-friendly Narendra Modi is tipped to emerge as the biggest party in the elections due in April-May, defeating the scandal-tainted ruling Congress party.
Growth slackened last year to a decade low of 4.5 percent and the government expects 4.9-percent expansion in this fiscal year to March 31.
The results of the general election, to be held in phases, are due in mid-May.
Foreign institutional investors have purchased $7.4 billion in local equities and debt so far in the fourth quarter of the current fiscal year, data from the Securities and Exchange Board of India showed.
Maruti Suzuki rose 7.58 percent to 1,868.85 rupees per share on Tuesday while Financial Technologies gained 4.99 percent or 18.00 rupees to 378.95 rupees per share.
Some analysts are sceptical about the stock market surge.
“We believe shares are in an extended overbought position, said Rahul Bhandawat, an equity analyst at Mumbai’s Equentis Capital.
“Cues from Crimea and the US Federal Reserve decision should not be overlooked, given our linkages with the world economy,” Bhandawat added.
Western leaders have announced sanctions against Moscow after Crimea’s vote to leave Ukraine and join Russia on Sunday.