Euphoria surrounding India’s new government and strong economic data continues to power stocks higher, but some analysts warn the nation’s economic fundamentals don’t support further gains.
“This might be as good as it gets for some time,” said Shilan Shah, an economist at Capital Economics, noting India’s second quarter growth data was welcome news.
Gross domestic product (GDP) grew 5.7 percent on-year in the second quarter, data released last week showed, up from 4.6 percent in the previous quarter and the fastest pace since the first quarter of 2012. Meanwhile India’s balance of payments was in surplus for a third consecutive quarter, data showed on Tuesday.
Excitement over the promise of Prime Minister Narendra Modi who came into power in May coupled with improving economic data is pushing Indian stocks higher.
The Sensex and Nifty surged to fresh record highs on Tuesday. Both indices are up 27 percent year to date, making India’s stock market Asia’s best performing in dollar terms this year, but whether stocks can sustain their rise is questionable.
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