with a new high on the benchmark indices. Market sentiment was buoyed by the comments coming from the PM and FM about modernizing the railways and taming inflation, respectively. Going ahead, we see the monsoon progress and the budget to be the two most important triggers for the markets. We feel that, a progressive budget as well as other reform initiatives will likely lead to continued outperformance of Indian indices v/s emerging market peers. The rise in railway passenger fares and freight charges have raised hopes of a reforms-oriented budget. However, if there is a continued rise in crude price, it will be a negative from the CAD, rupee and inflation perspective. Monsoons have also been erratic and it is a risk from the inflation perspective.
Indian shares hit record closing high on optimism ahead of budget
(Reuters) India's NSE index hit a record high on Friday as bluechips such as Reliance Industries rose on optimism that Prime Minister Narendra Modi will deliver a fiscally prudent budget next week.
Investors are betting that Modi and Finance Minister Arun Jaitley will unveil next week a credible budget that seeks to raise revenue, including from sales of state-run firms, while keeping spending under control.
Foreign institutional investors, who have been the backbone of the 23 percent gain in the broader NSE index so far this year, bought Indian shares worth 9.51 billion rupees ($159.27 million) on Thursday, exchange and regulatory data showed.
"Most investors, including FIIs, are putting new money in the market on hopes the budget will lead the way to a revival in the economy. Build-up of positions has already started," said Deven Choksey, managing director at KR Choksey Securities.
"The budget may focus on revival in growth and fiscal consolidation. We are bullish and expect the Nifty to trade between 7,500 and 8,000 in the near term,"
The benchmark BSE index closed 0.54 percent higher at record 25,962.06. It gained 3.4 percent this week after falling in the previous three weeks.
The broader NSE index ended 0.48 percent higher at record 7,751.60, gaining 3.2 percent this week.
Bluechips were among the leading gainers. Reliance Industries Ltd ended 2.5 percent higher, marking its biggest single-day gain since June 6.
Other gainers included HDFC Bank, which was up 2.4 percent, and NTPC Ltd which gained 0.8 percent.
Investors also hedged their risk by buying defensives such as drug makers. Dr Reddy's Laboratories Ltd rose 1.5 percent and Sun Pharmaceutical Industries Ltd