India’s equity indices advanced 0.6% on Monday with the Sensex closing above 60,000 once again after three weeks, mirroring gains in the rest of the world. The stock benchmarks gave up a portion of their early gains as the Nifty neared its crucial hurdle of the 18,000 mark. Investors are now awaiting the US consumer inflation reading for August on Tuesday that could be one of the key factors influencing the extent of the Federal Reserve’s rate hike at its meeting on September 20-21.

BSE’s Sensex rose 321.99 points, or 0.54%, to close at 60,115. NSE’s Nifty gained 103 points, or 0.58%, to close at 17,936, off the day’s high of 17,980. It had closed above 18,000 last on April 4.

Analysts expect the index to cross this level soon as foreign funds continue to purchase Indian stocks despite concerns over expensive valuations.

sensex: Sensex reclaims 60,000 Level


“There is money coming into India because we are seen among the very few stable and growing markets in the middle of a lot of uncertainty worldwide,” said Siddarth Bhamre, research head at Broking. “That also explains the premium valuations that Indian stocks have been commanding.”

Foreign portfolio investors (FPIs) bought shares worth a net ₹2,050 crore on Monday, according to provisional data. So far in September, these investors have purchased shares to the tune of ₹3,400 crore but this is lower that their August purchases of ₹53,994 crore. Though flows into Indian stocks have continued this month, they have become patchy, partly on account of rich share valuations, some brokers said.

The MSCI India index is trading at an estimated price to earnings (PE) ratio – a popular valuation measure – of 23.38 times. The MSCI Emerging Markets index’s PE ratio is 11.33 times.

Elsewhere in Asia, Japan rose 1.2%, Taiwan jumped 1.5% and Thailand gained 0.8%. China, Hong Kong, and South Korea were shut for public holidays. The pan-Europe benchmark Stoxx 600 ended up 1.76%.

The US Consumer Price Index in August is expected to rise 8.1% as against 8.5% in July, according to reports. Investors will watch the impact of the August inflation figure on US bond yields.

“Rising inflation risk and hence the withdrawal of ultra-easy monetary policy by global central banks, mainly Federal Reserve, may trigger a sharp rise in bond yields which can cause risk assets to correct sharply,” said Pankaj Pandey, head, research, ICICIdirect. “One can remain invested with a vigilant eye on the move in yields world over which can result in sharp 10-15% correction from the current levels.”


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