Indian stock market hits new peak amid buying spree

MUMBAI (AFP) - Indian shares swept past the 27,000-point mark on Tuesday, a record high buoyed by investor hopes that the country will see stronger economic growth under new Prime Minister Narendra Modi.

The Bombay Stock Exchange's benchmark Sensex index of 30 leading shares ended the day up 0.57 per cent or 151.84 points at 27,019.39 points. The Sensex has been on the rise for eight straight trading sessions.

The market, which set a third record high in as many trading days, was boosted by strong inflows of foreign funds on investor optimism about economic recovery under right-wing Modi's leadership, analysts said.

"People abroad have faith in the potency and execution of the new government. They are sending the right signals," investment house Morgan Stanley managing director Ridham Desai told financial portal money control.com.

Desai forecast the Sensex could rise as high as 33,900 points by June next year on certain conditions, including the Indian government staying on its path of fiscal consolidation.

"We are fairly comfortable (with India) for the next three years at least," Desai said. "There is a very big India (growth) story that a lot of people have a lot of faith in," he added.

In a speech to a business audience in Japan, Modi, who is on an official visit to the country, promised there would be no more of India's infamous bureaucratic "red tape", only a "red carpet" for investors.

Investors were drawn by forecast-beating quarterly economic growth data late last week, dealers said. India's economy expanded by 5.7 per cent in the first quarter of the financial year, the best quarterly performance in over two years.

A sharp narrowing of India's current account deficit - the broadest measure of trade - also boosted investor sentiment. Among the shares which gained, generics giant Cipla surged 5.23 per cent or 27.70 points to close at 557.40 rupees after launching a new asthma inhaler in Germany and Sweden.

India's biggest cellular operator, Bharti Airtel, climbed 4.24 per cent or 15.95 rupees to 391.90 rupees after the company clinched a deal to acquire the nearly 3 million subscribers of Kenya's yuMobile.

The Sensex's rise has been underpinned by strong global liquidity that has fuelled markets worldwide. It has rallied by close to 9 per cent since Modi took office on May 26 after leading his Bharatiya Janata Party government to the first one-party parliamentary victory in three decades.