The BSE bellwether had breached the 22,000 mark for the first time on March 24, 2014, and by surpassing the 27,000-mark for the first time on Tuesday, it has crossed six milestones over six months.
Both economic and corporate fundamentals are improving, even though these are early days. Auto, cement and some other sectors have shown strong volume growth, said Harsha Upadhyaya, chief investment officer equity, Kotak Mutual Fund.
The governments move to speed-up clearances of stalled projects and focus on opening up key sectors for foreign direct investment has also been taken as a big positive by investors. Additionally, softening of global crude prices, which has been a factor in the dip in CAD, has also boosted sentiment. While the real GDP expanded by 5.7 per cent in Q1FY15, compared to 4.6 per cent in the previous quarter, the CAD narrowed sharply to 1.7 per cent of the GDP or $7.8 billion in the first quarter of the fiscal. Further, boosting the markets, foreign institutional investors invested a net of Rs 1,227 crore over the last two trading sessions when the Sensex and Nifty have risen by 1.4 and 1.6 per cent, respectively.
With steady US bond yields despite ongoing taper and most other central banks in easing mode, the global liquidity is strong and is looking for better investment avenues in emerging markets. Monthly emerging market fund inflow in August, at $3.8 billion, was the second best in a decade. With domestic fundamentals on an improving trend, India is well positioned to receive global flows, said Upadhyaya.
While the Indian markets are trading high on valuations and look expensive relative to those of Brazil, Russia, China and Turkey, some experts feel that there is no reason to worry on the valuations front.