Bulls continue with the positive momentum as Indian benchmark indices touched a record high on Wednesday. The Sensex hit its fresh all-time high of 56,198.13, while the Nifty made a fresh peak of 16,712.45 in intraday trade. This was the third consecutive day when Sensex and Nifty had scaled to new record highs. The broader market also witnessed a strong buying spree in the last few sessions. With BSE midcap and smallcap gaining 0.5 per cent each, the indices outperformed their headline peers. Tata Motors, Bajaj Finserv, Adani Ports, Bajaj Finance, Tata Steel and Hindalco Industries were among the top gainers in the 50-share pack Nifty. Britannia Industries, HDFC, Infosys, Asian Paints and Nestle were among the biggest losers on Wednesday.
With a dip in daily Covid-19 cases, record coronavirus vaccination numbers and suitable global market and ample liquidity support, market analysts expect the bull rally to continue. Investors are advised to book profits if they are in a position while the rest can use ‘buy on dips’ strategy.
Reliance Securities head strategist believed that Sensex may cross 60,000 by the year-end. “Sensex has already gained over 17 per cent so far in 2021. We believe liquidity factor has also supported sharp rally in markets. Going forward, as ultra-loose monetary policy of Federal Reserve does not look to sustain for long, we believe liquidity factor might take a backseat and only quality aspect will play out. However, considering strong earnings outlook and possible recovery in credit growth and improvement in asset quality of bank, Sensex crossing 60,000 cannot be ruled out," Binod Modi, head strategy at Reliance Securities mentioned.
Major US stock indexes — Nasdaq and S&P 500 — closed at record highs as market sentiment was boosted by US government approving Pfizer-BioNTech Covid-19 vaccine. Investors are keenly waiting for Jackson Hole Symposium on Friday for clues on US central bank’s policy-tightening timeline. This is expected to cheer Indian traders as well.
Strategists believe that Indian benchmark indices likely to sustain the momentum and surprise the traders in the coming months. “Bull markets have an ability to surprise. During the 2003-07 bull run. Sensex surged from around 3,000 in May 2003 to above 20,000 in December 2007 surprising even the incorrigible optimists. So, 60,000 Sensex cannot be ruled out. But that would lead to frothy valuations and a risk of a major crash,” said Dr VK Vijay Kumar, Chief Investment Strategist at Geojit Financial Services.
All the major sectors, except pharma, bank and auto, supported the rally on Wednesday. On the BSE, IT, power and oil & gas indices gained 0.8-1.2 per cent. More than 100 stocks, including Wirpo, Tech Mahindra and Bajaj Finance hit 52-week high on the BSE.
“After a small correction, the benchmark index BSE–Sensex again hit a new lifetime high at 56198.13 in early trades on Wednesday. Overall, BSE Sensex has gained more than 15 per cent since Jan 21 along with rallies in BSE Midcap & BSE Smallcap, which rewarded good long-term returns to the investors. Overall, market sentiments remain bullish for the long term. Hence, we are expecting further upside move in the index towards 57,000-57,500. If the market sustains above those levels, it will decide the next direction,” Sachin Gupta, AVP, research, Choice Broking said.
All eyes are now on the India’s gross domestic product (GDP) data which is scheduled by the end of this month. Indian economy is expected to grow at 18.5 per cent in the June quarter due to low base effect, State Bank of India said in a research report. This projection, however, is lower than the 21.4 per cent growth projected by Reserve Bank of India.
India’s liquidity-driven stock market rally is expected to cool next year as global and domestic monetary policy starts to tighten, according to a Reuter’s poll of analysts.