The BSE Sensex remained little changed on Monday, but closed at a new high, gaining for a fifth consecutive session, as overseas funds continued to shop for shares. The Sensex crossed the psychological 22,000-mark intraday for the first time in its history, before losing momentum in the last hour and a half of trade and falling below the level.
Foreign institutional investors (FIIs), who have been betting heavily on BJP’s Narendra Modi to lead the next government at the Centre, continued with their buying spree for the 18th consecutive session. FIIs bought shares worth $205 million on Monday, provisional data from BSE showed, after purchasing $422 million worth of shares last Friday — the biggest single day purchase since December 9. FIIs have pumped in $1.78 billion in the last 18 sessions.
Hopes of a new government, led by the BJP-led NDA, seems to have bolstered the confidence of overseas investors. A national poll conducted by CSDS had predicted on Thursday that the BJP-led National Democratic Alliance (NDA) would win 212-232 seats in the Lok Sabha election, while the Congress-led UPA would end up with between 119-139 seats.
On Monday, the 30-share BSE Sensex rose 0.07%, or 15.04 points, to close at 21,934.83, hitting an all-time high at 22,023.98 during intraday trade. The 50-share Nifty rose 0.16%, or 10.60 points, to end at 6,537.25. The gauge touched an intraday high of 6,562.20, marking its second consecutive all-time high.
A stable rupee and positive current account deficit numbers have helped. The rupee touched a seven-month high at 60.8425 versus the US dollar. Current account deficit fell to its lowest in 4 years, with the CAD for the quarter ended December 2013 slipping to 0.9% of the GDP to $4.2 billion, from 6.5% a year earlier.
Interestingly, the Sensex has already surpassed some of the year-end targets set by foreign brokerages of late. For instance, brokerage Deutsche Bank had recently set a Sensex target of 24,000 for December 2014, at which Sensex will trade at 15.8x FY15 EPS, in line with average of past five years. Citi, on the other hand, had set a target of 21,800 for December 2014.
Fund manager Prashant Jain, said in an interview with a private news channel: “Current account deficit has been fixed, fiscal deficit, diesel prices continue to go up, inflation interest rates have peaked — on how fast they fall, how much they fall, time