Indian stocks have rallied sharply over the last two months, soaring to record highs, although the bull run that began with expectations that Narendra Modi will become the country’s next Prime Minister may soon run out of road.
India’s top equity index, the BSE Sensex, was trading over 24,850 on Tuesday, having shot up over 10 percent since mid-April alone, when polling began, despite economic growth languishing below 5 percent, along with high inflation and interest rates.
With growth at just 4.7 percent, only a marginal improvement from the 10 year low plumbed in the previous financial year, the market could struggle in coming months, especially if the economic data continue to disappoint.
“It’s more about perception now,” said Neeraj Dewan, Director at Quantum Securities. “If you look at earnings, you would sell half the stocks.”
The rally undoubtedly started from anticipation that Modi would lead his Bharatiya Janata Party (BJP) to victory in the Indian general election, and possibly with a majority government.