India’s economy has struggled to revive demand, contracting by nearly a quarter last year as a hastily-announced shutdown put millions out of work . ©AFP/File Punit PARANJPE 

Mumbai (AFP) – Indian stocks hit record highs Thursday, tracking a global rally after the inauguration of US President Joe Biden and reflecting hopes of a domestic economic recovery following this month’s vaccine roll-out.

The Bombay Stock Exchange’s Sensex index rose 0.5 percent to pass the 50,000 mark for the first time ever, extending recent gains on the back of strong corporate earnings, especially in India’s bellwether IT sector.

Asia’s third-largest economy has struggled to revive demand, contracting by nearly a quarter between April and June last year as a hastily-announced shutdown put millions out of work even as cases climbed, making it the second-most infected country in the world.

But fears of a second wave of coronavirus infections have not materialised, allowing Prime Minister Narendra Modi’s government to lift restrictions and resume economic activity.

Although India entered a technical recession for the first time since independence in 1947 after contracting for a second successive quarter between July and September, experts expect the economy to recover as vaccinations pick up pace.

“The absence of renewed lockdowns means that economic activity will normalise quite quickly,” said Ashutosh Datar, an independent economist.

“Also, even if India does face a second wave, it won’t be as bad as what’s happened in the West, since a fair number of people will be vaccinated in the next few months,” he told AFP.

Mumbai’s main Sensex index was up 344 points or 0.69 percent at 50,137 points at 1130 am (0600 GMT). The Nifty 50 was up 93 points or 0.64 percent at 14,738 points.

Banking and tech stocks were among the top performers, along with Indian conglomerate Reliance Industries, owned by Asia’s richest man Mukesh Ambani.

Indian IT firms including Infosys and rival Tata Consultancy Services (TCS) recorded strong profits in the October-December quarter, thanks to increased demand for digital services during the pandemic.

Reliance will announce its quarterly earnings on Friday.

Investors are also looking ahead to the release of the government’s annual budget at the beginning of next month, with Finance Minister Nirmala Sitharaman facing the tough task of boosting employment and demand while keeping the ballooning fiscal deficit in check.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.