Indian stock markets closed at record highs on Monday (3), buoyed by increased investor confidence in the domestic economy and in line with rises across Asia.
Analysts said traders were betting on economic reforms following the Indian government’s recent massive victory in a key state election, while the indices were also being lifted by recent rallies in some international equities.
“The Uttar Pradesh election is a factor and demonetisation is behind us. Most importantly GST (goods and services tax) will get approved in July and that’s positive,” said Rahul Shah, an equities analyst at Motiwal Oswal Securities.
“But it’s not just India. There’s a global effect. All these things together is why the markets are touching new highs. Economically I don’t see any major challenges which might spoil the party right now,” he added.
The Bombay Stock Exchange’s (BSE) benchmark Sensex index rose 0.98 per cent, or 289.72 points, to end the day at 29,910.22. That surpassed its previous closing high of 29,681.88 set in January 2015.
Meanwhile, the Nifty on India’s National Stock Exchange (NSE) closed above the 9,200-point mark for the first time ever.
Last week the lower house of parliament passed bills paving the way for a landmark tax reform that will transform the world’s fastest growing economy into a common market.
The GST law, which the government is aiming to launch by July 1, will replace a decades-old patchwork of federal and state taxes.
It is one of the biggest economic reforms of the business-friendly government of Prime Minister Narendra Modi, which came to power in 2014 pledging to transformIndia’s economy.
The landslide victory in the most populous state of Uttar Pradesh last month was seen as a major vote of confidence in the prime minister’s plans, including his shock decision to withdraw all high-value banknotes from circulation last year.
The win is also expected to make it easier for his government to pass legislation in parliament.
Japanese and Hong Kong stocks closed up Monday after European stock markets ended last week higher.