Indian Stocks Hover Near Record As Investors Await Fed Talk

Indian stocks ended little changed for the second straight session on Wednesday, as investors held back on placing big bets before a Federal Reserve meeting.

Both the S&P BSE Sensex at 29,894 and the NSE Nifty at 9,313 closed flat for the day. The options data for the 50-share index suggest the popular gauge is likely to remain between the range of 9,300 and 9,400.

Movers & Shakers

• Drugmaker Lupin dropped the most in the Sensex, down 3 percent after a report that quarterly sales fell for two of its generic drugs in the U.S.
• Property stocks extended their gains for a second day boosted by a new law seeking transparency in real estate transactions and the government's focus on affordable housing.
• Tata Consultancy Services Ltd. gained over 2 percent and was the top performer on the NSE Nifty Information Technology index.

Also Read: Do Brokerage Stocks Have Room To Rally Further?

‘Expensive Valuations Here To Stay'

Inflows from local and overseas investors have pushed the valuation of the Sensex to the highest level in seven years, and according Morgan Stanley, they may remain at these elevated levels. The reason being: Indian households moving out of physical assets investments toward financial assets and rise in equity savings.

The Sensex traded at 17.7 times its estimated 12-month earnings, the highest since 2010. Overseas investors have purchased $6.4 billion of local stocks this year through April 28, while domestic funds have bought nearly $1.8 billion of stocks in the first three months, according to data compiled by Bloomberg.

“The domestic equity saving is likely to increase by $420 billion to $ 525 billion over the next 10 years,” the Morgan Stanley note said, adding that equity savings will be 1.4 percent of GDP, compared with 0.7 percent now.

It expects small and mid caps to continue outperforming their larger peers over the medium-term.

Also Read: Cummins India Jumps Most In 20 Months On Morgan Stanley Upgrade