The run-up in the stock markets seems endless. The momentum continued for the eighth consecutive session on October 19, taking the BSE Sensex above the 62,000 mark and helping the Nifty 50 surpass 18,600, following positive global cues and strengthening economic sentiment.
The fall in Covid-19 cases and better corporate earnings have also contributed to the current rally.
The BSE Sensex surged 428.31 points to 62,193.90 and the Nifty 50 jumped 106.50 points to 18,583.50 at 12:31 hrs IST, taking the gains over eight sessions to over 5 percent.
Notably, the rally has lifted every sector even amid rising crude oil prices in the international markets, which experts said could create inflationary pressure. Auto and consumer durables took the lead, while improving credit growth lifted banks.
“Weakness in global markets is not having any impact on stock prices in India, which continued to climb for the eighth successive day, setting fresh records,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services. “Valuations, particularly in some segments, are clearly dangerously high.”
Price-earnings ratios above 100 are hard to justify however promising the prospects are, he said. When the trend inevitably reverses, such pricey stocks are likely to come under bear hammering.
“Fundamentally sound stocks like the banking majors are still not overvalued. Valuations and quality should be given adequate importance in these exuberant times,” Vijayakumar added.
The BSE auto index gained 11.5 percent and the consumer durables index rose 13 percent. The metals index gained 11 percent amid rising base metal prices due to supply concerns. The bank, capital goods, FMCG, IT, realty and power indices have gained 3.5-9 percent in eight sessions.
There was strong demand for IT stocks, with the Nifty IT index, which has the second-highest weightage in the Nifty 50 after banking and financials, rising 3 percent. Banking and financials gained half a percent each today.
The BSE Sensex has taken eight months to add 10,000 points from 52,000 on February 15, gaining 19 percent. However, the BSE 500 index outperformed the Sensex, rising 26 percent, and 53 stocks in the index turned multibaggers, rallying between 100 percent and 400 percent.
The top five stocks among them are JSW Energy (up 417 percent), Gujarat Fluorochemicals (up 273 percent), Happiest Minds Technologies (up 251 percent), IRCTC (up 243 percent) and Adani Total Gas (up 238 percent).
IRCTC has been in limelight following the opening up of the economy and the fall in Covid-19 cases. The stock hit Rs 1 lakh crore market capitalisation for the first time and traded above Rs 6,000.
Tata Power, Trident, HFCL, Indian Energy Exchange, Mindtree, Gujarat Alkalies, Adani Transmission, KPIT Technologies, NALCO, Deepak Nitrite, Welspun India, Persistent Systems, GHCL, Tata Elxsi, Adani Power, COFORGE, Indiabulls Real Estate, Tata Coffee, Adani Enterprises, Tata Steel, IDBI Bank, SAIL, Vedanta, Oil India, Lux Industries, HEG, ICICI Securities, and MphasiS gained 100-196 percent over the past eight months.
The market received major support from domestic institutional and retail investors, whereas foreign institutional investors turned net sellers. In addition, SIP inflows crossed Rs 10,000 crore for the first time in September at Rs 10,351 crore. Experts said this will increase in the coming months on wider awareness about mutual fund investments.
FIIs have net sold more than Rs 21,000 crore worth of shares in eight months, while DIIs have bought a net Rs 48,700 crore of equities in the same period.
The market is focussing on corporate earnings but is also closely watching oil prices as Brent crude futures traded at about $85 a barrel. As a net oil importer, high prices are a risk for India’s growth.
According to Mohit Nigam, head-PMS, at Hem Securities, rising oil prices pose a risk for India and may hit the country’s industrial growth.
“The quarterly earnings season will be in full swing this week as nearly 200 companies will declare their July-September period scorecard. The vaccination drive has been going on smoothly across the country as health minister Mansukh Mandaviya said India would reach 100-crore Covid-19 vaccination mark this week,” Nigam said.
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