News Column

Global shares rally as Sensex hits new record

May 13, 2014

Babu Das Augustine Deputy Business Editor

Dubai: Equity markets across the developed world gained yesterday on strong first quarter corporate earnings and improving macroeconomic data, while in Asia and the Gulf region, markets gained on reasons ranging from election results India to an upgrade of the UAE and Qatar markets to Emerging Markets by MSCI.

European shares rallied on Tuesday with a key index hitting a six-year high as upbeat corporate results and prospects of more stimulus from the European Central Bank boosted risk appetite.

The pan-European FTSEurofirst 300 index rose 0.2 per cent to 1,367.17 points, its highest level since May 2008, while Britain'sFTSE hit a 14-year high.

Wall Street stocks opened mostly higher on encouraging report on small-business optimism, a day after it and the S&P500 closed at record peaks. In early trade Dow Jones Industrial Average advanced 25.17 points (0.15 per cent) to 16,720.64. The Standard & Poor's 500 index crossed above 1,900 for the first time as investors assessed news on retail sales.

The Nasdaq Composite Index also rose the most since January, adding 1.8 per cent to trim its loss for the year. While the technology-heavy gauge has recovered 3.8 per cent from its April low, it remains 4.8 per cent below a 13-year high in March.

In a sign of improving investor confidence 66 per cent of respondents to a global fund managers' survey by Bank of America Merrill said they are confident that both the world economy and corporate performance are improving and a net 49 per cent said that corporate profits will rise this year.

In India, the S&P BSE Sensex added 1.4 per cent to a record 23,871.23 at the close in Mumbai. The rupee climbed 0.6 per cent, the most since April 25, to 59.67 per dollar after exit polls showed the main opposition alliance led by Narendra Modi likely to form the next government.

"The Indian polls signal a potentially larger than expected victory for Modi; that would be very bullish for reforms," Michael Wang, an emerging-markets strategist in London at Amiya Capital LLP.

Global investors have ploughed $10.7 billion into Indian stocks and bonds this year. They bought a net $341 million of shares today, according to provisional data from the exchanges, the most since March 28. Inflows may continue on expectations of a stable government, Goldman Sachs Group Inc. said in a report today. JPMorgan Chase & Co. said it expects "market revelry" to continue as exit polls show a Modi-led alliance may be less reliant on the support of regional parties.

with inputs from agencies

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Source: Gulf News (United Arab Emirates)