India : Nifty hits 15-1/2 month high on strong US jobs data

The Nifty rose to a 15-1/2 month high on Monday, tracking gains in other Asian stock markets after a solid U.S. jobs report bolstered expectations of an acceleration in U.S. economic growth at a time of ultra-easy global monetary policy conditions.

Although the strong July U.S. payrolls data raised hopes for the world’s biggest economy may have conclusively turned a corner after some volatile readings this year, investors expect the Federal Reserve will only raise rates in 2017 given that other countries are still cutting rates.

Sentiment back home also remained supported by the passage of the long-awaited Goods and Services Tax (GST) Bill in the upper house of parliament last week, which paves the way for the rollout of the country’s single biggest tax reform since independence.

Still, analysts said further gains could be constrained on valuations. The broader NSE index is valued at 20.71 times its estimated 12-month earnings, versus a multiple of 13.46 for the Thomson Reuters Emerging Markets Asia Pacific Index.

Investors are also likely to take a pause ahead of the Reserve Bank of India’s policy review on Tuesday where it is expected to leave rates unchanged.

“Today’s gains are mainly due to positive U.S. jobs report which has improved sentiment globally. Going ahead, we expect some consolidation or even correction as valuations have peaked-up,” said Ambareesh Baliga, a Mumbai-based independent market analyst.

The broader Nifty was up 0.24 percent at 8,703.21 as of 0604 GMT after hitting its highest since April 16, 2015 earlier in the session.

The benchmark BSE Sensex was 0.34 percent higher at 28,173.52.

Both indexes were headed for their third straight session of gains.

Among the gainers, miners Hindalco Industries Ltd and Vedanta Ltd rose 4.3 percent and 1 percent respectively, tracking gains in London copper prices after solid U.S. jobs reports boosted appetite for metals.

Oil refiner Hindustan Petroleum Corp rose 2.3 percent after the central bank on Friday raised the limit for foreign shareholding in the company to up to 40 percent from 24 percent.

Housing Development Finance Corp rose 0.8 percent ahead of the Max Financial board meeting to discuss terms of planned merger with HDFC Life.

But Union Bank of India fell 5 percent after the state-run lender’s first-quarter profit plunged 68 percent on higher bad loans.