The stock markets are in a festive mood with the 30-share Bombay Stock Exchange (BSE) Sensex closing the day at another all time high of 21,164 points and the broader 50-share Nifty scaling a three-year high. The market turnover crossed `5 lakh crore on Thursday.
While the Sensex closed 130.55 points higher, the Nifty ended the day 47 point higher at 6,299 points. The Sensex is now just 42 points short of its all time intra-day high of 21,206.77 points. Marketmen said that the rally was still largely fuelled by foreign institutional investors (FIIs) though the mood was boosted by quarterly earnings of public sector banks that came in as a pleasant surprise.
Commenting on the market, brokerage house Angel Research’s vice-president-research Vaibhav Aggarwal said, “We were expecting this rally. The next trigger is going to be the increase in exports and the decrease in the trade deficit. This will be followed by improved agriculture thanks to a good monsoon, lower agricultural prices and lower inflation. These factors will help the Sensex reach new highs.”
At a time when marketmen are talking about the Sensex vaulting to 22,000 points, Vaibhav advises retail investors to still participate in the rally by picking “quality stocks in quality sectors”. That may be true but Thursday’s rally did not see much participation from retail investors.
On Thursday, the BSE mid cap index was up by 1.43 per cent, the consumer durables index by 2.65 per cent, the BSE PSU banks index by 2.47 per cent, the bankex by 1.93 per cent, the metals index by 1.73 per cent and the oil and gas index by 1.44 per cent.
According to Sharekhan’s head of research Gaurav Dua, there are three clear characteristics of this rally. “One, it is a liquidity driven risk on rally. Two, there are some improving economic data such as the sharp reduction in the current account deficit, declining crude oil prices and a return in stability of the rupee. Three, better than expected earnings have further fuelled the market’s expectations,” added Dua.