Sensex scales 65K but analysts say valuations getting stretched

NEW DELHI:

The BSE Sensex scaled 65,000 on Monday led by Reliance Industries. Indian markets have been scaling new highs led by huge FII buying.

Reliance was the top gainer in Sensex up by 2.32 per cent. HDFC twins and SBI among financial stocks were among the main gainers.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said the ongoing rally in global stock markets is primarily driven by the surprising and unexpected strength of the US economy ( 2 per cent GDP growth in Q1 23), in spite of the savage 500bp rate hike by the Fed. Global markets which had discounted a US recession by mid 2023 have been proved wrong and the markets are now compensating for the excessive pessimistic discounting in 2022, he said.

He added that an important point of distinction between the rally in US and in India is that the US rally is primarily being led by eight tech stocks while the Indian rally is more broad based. Sustained FPI flows (Rs 47148 crore in June) is the main driver of the rally in India.

The recent surge in FPI inflows have been triggered by the recent ‘Sell China, Buy India’ strategy of the FPIs which, in turn, is being influenced hugely by the anti-China attitude/policy evolving in the US and the developed world.

Since the strength of the market momentum is high, the rally can continue but valuations are getting stretched, he added.


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