There seems to be no stopping the market bulls. The benchmark Sensex on Wednesday topped the 46,000 mark amid relentless buying by foreign portfolio investors (FPIs). Gaining for a seventh consecutive session, the gauge for the performance of the country’s leading 30 stocks rose 1.1 per cent, or 495 points, to end at 46,103.
The Nifty50 index added 136 points, or 1 per cent, to close at 13,529. Both the indices have logged record highs in 14 of the last 21 trading sessions and are up 4.4 per cent in December, extending the last month’s 11.5 per cent gain.
The sharp surge comes on the back of record inflows by overseas investors. After pumping in $8.1 billion in November, FPIs have bought shares worth over $2 billion in just five sessions of this month.
On Wednesday, they bought shares worth Rs 3,560 crore. The latest 1,000-point upmove for the Sensex has come in just three trading sessions.
“Multiple factors are playing part. Vaccination news, decreasing cases in India, and continuous liquidity have been the key factors. The economic revival has also been strong and this will continue to aid the markets,” said Naveen Kulkarni, chief investment officer, Axis Securities.
On Tuesday, the Union health ministry announced that some Covid-19 vaccines were likely to receive licences in the next few weeks. Further, the ministry revealed its plan to immunise 300 million people.
“Things will get back to normal once the vaccine rolls out,” said Jyotivardhan Jaipuria, founder, Valentis Advisors. “Moreover, global liquidity is in plenty and interest rates are low. The dollar index is weakening, and every time dollar index weakens, emerging markets do well.”
Meanwhile, the Trump administration on Tuesday proposed a stimulus package worth $916 billion, including liability protection and state and local government aids. Stocks across the globe rose after the sudden announcement of the package.
Analysts said foreign institutional investors inflows and economic recovery would determine the market movement from hereon. The sharp upmove in the recent past in several stocks which do not have strong earnings visibility and corporate governance record is concerning investors.
“In our view, premium valuations of the market may sustain as long as earnings visibility remains intact and central bankers do not press the button of fiscal policy tightening. However, rich valuations may not result in a broad-based market rally in the medium term. Therefore, stocks which have strong earnings potential with high margins of safety should be preferred,” said Binod Modi, head of strategy at Reliance Securities.
As many as 273 stocks hit their 52-week highs, and 446 stocks were locked in the upper circuit on the BSE.
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