The Indian market remained on a firm footing, with benchmark Sensex hit a new high of 52,641.53 on June 11, joining the Nifty in the record-breaking spree.
The 30-pack index surpassed its previous best of 52,516.76 hit on February 16, backed by strong FII inflow, increased retail participation and a steady fall in the daily coronavirus cases in the country, fuelling hopes of the complete opening of the economy soon.
Positive global cues, faster vaccination and strong March quarter earnings also aided sentiment as the Nifty50 climbed a new peak of 15,835.55.
Reliance Industries, which has risen 16 percent in last month, fronted the rally. Banking & financials, IT, auto, FMCG and infrastructure were the leaders amid hopes of strong growth in the next few quarters.
Experts said unlocking of the economy and strong growth could push the Sensex to 55,000-60,000 by December-end.
“The stock market is solely focused on the future. Hopes of a quick economic revival post unlock and expectation of a large number of adult population vaccinated in 2021, are keeping markets excited. Q4FY21 earnings have been encouraging, even after adjusting for the low base of March 2020,” said Amar Ambani, Senior President and Head of Research – Institutional Equities at YES Securities.
Also read: Sensex, Nifty scale fresh peaks; 5 key factors powering the market
“The broader market is very healthy. It is very likely that the top 10 heavyweights of the Sensex, which have been dormant for some time, will begin to participate. Already RIL has resumed its up move after a six-month lull. This will add to the strength of Indian equities. Our target for Sensex is 60,000 by December 2021,” he added.
After hitting a peak of more than 4 lakh daily cases on May 8, infections have been declining and dropped to below 1 lakh in the last few days.
As more people get cured, active cases, too, have fallen significantly and states have begun rolling back restrictions which lifted sentiment.
Ajit Mishra , VP- Research, Religare Broking, said the uptrend can continue and the Sensex may hit the 55,000 mark by year-end as optimism was high due to falling COVID cases and the beginning of “unlocking” by states.
“Further, demand improvement and revival in growth will aid the rally. At this time, investors should be very selective, a) invest in stocks that will benefit from unlocking, and b) prefer companies that have prudent management, strong fundamentals and a healthy balance sheet and long-term growth prospects,” Mishra said.
Gaurav Garg, Head, Research, CapitalVia Global Research, said the Sensex could test the psychologically important resistance level of 55,000 in the near future.
“The Indian markets are trading at record high levels on the back of positive global cues such as encouraging US non-farm payroll data, in line RBI policy outcome and healthy auto sales. Many states are geared up to resume their economic activity in a phased manner. As things are returning back to normalcy, we expect the overall trend of the benchmark indices to be constructive,” he reasoned.
Investors should consider holding their positions as the rally would continue, though there could be some amount of profit booking as the Sensex would approach the resistance level of 55,000, Garg said.
The broader market is also participating in the bull run. The BSE midcap and smallcap indices have gained over 10 percent and 11 percent, respectively, in the last month.
“We expect the positive momentum to continue in the broader market and expect midcaps and smallcaps to continue their outperformance,” said Yash Gupta Equity Research Associate at Angel Broking.
Quarterly results have been good and the trend is expected to continue in the second half of 2021 as well. “We remain bullish in the long term, but the Sensex may consolidate for some time post the up move,” Gupta added.
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