Sensex, Nifty kiss life time highs

India’s benchmark indices surged to record highs and the rupee gained as a March quarter slowdown boosted expectations that the Reserve Bank of India could cut interest rates and ease its policy stance this week. The Sensex closed above 40,000 and Nifty above 12,000 for the first time...

The benchmark bond yield slid to an 18-month low as a slowing economy and falling oil prices sparked speculation that the central bank will cut rates more than once. Data released on Friday showed that India's economy grew at 5.8% in the January-March period, its slowest pace in five years. The rupee ended at 69.26 against the US dollar on Monday while the Indian currency closed at 69.70 on Friday. The Sensex jumped 553.42 points, or 1.4%, to close at 40,267.62 after scaling an all-time intraday peak of 40,308.9 during the session. The Nifty too touched an all-time high of 12,103.05 points before ending 165.75 points, or 1.4% up, at 12,088.55. India VIX, the volatility gauge, slipped 0.85% to 15.93. Two wheeler makers Hero MotoCorp and Bajaj Auto led market advances on rate cut hopes, gaining 6% and 3.9%, respectively. IndusInd Bank, Asian Paints and Hindustan Unilever were the other top gainers.

Foreign portfolio investors bought shares worth ₹3,068.9 crore on Monday. Their domestic peers sold stocks worth ₹462.7 crore.

All sector indices barring the media index ended in the green.

Rate sensitives were among the top gainers, with the Bank Nifty gaining 0.9% and the Nifty Auto index surging 1.9%.

The Indian stock market bucked the trend elsewhere in Asia, which ended mixed amid rising concerns over US-China trade tensions.

The second bi-monthly monetary policy statement for 2019-20 will be announced on Thursday and the consensus is pointing toward a 25 bps cut in the repo rate.

Besides the rate cut hopes, the market sentiment has continued to remain buoyant after the landslide election verdict in favour of the Narendra Modi-led coalition on May 23 over reform hopes.

Kotak Institutional Equities said the government has limited scope for a fiscal stimulus given India’s grim fiscal position.

The brokerage said the risk-reward balance in the market is quite unfavourable given the rich valuations for quality stocks, downside risk to earnings and somewhat weak macroeconomic situation.

Indian benchmarks have gained 12% since March, which is when the market rally began after a sluggish performance in the first two months of the year.

The rally was triggered by heightened expectations of the BJP government returning to power after its response to the Pulwama terror attack.

Despite setbacks in the form of US-China trade tensions and higher crude oil prices, India is the top performer behind China in terms of performance this year within the Asian markets.

The Nifty has gained 12% in dollar terms so far in 2019 while China's Shanghai Composite has gained 15.4%,.

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