Sensex touches 35,000 mark: Why stock analysts are betting big on Indian markets' rally ahead of Budget
The market has reacted favourably to the government’s initiatives and reforms and will continue to do so as the fruit of the latter is being seen now
The ongoing stock market rally is backed by a host of factors including return of investor coonfidence in the Inaian economy, signs of reforms paying off and likelihood of improvement in the corporate earnings in the period ahead, said stock market analysts. The buoyancy in the stock market continued on Wedneasday with the benchmark 30-scrip Sensex touching 35,000 mark for the first time on intra-day trading giving bullish signals to the investors.
According to BSE data, the Sensex touched 35,002.78 points in the intra-day trade. The Sensex closed at 35081.82, up 0.89 percent, from the previous close. The 50-share Nifty closed at 10788.55, up 0.82 percent. from the previous close. Analysts expect the market to touch the 40,000 mark by the year-end.
The market has reacted favourably to the government’s initiatives and reforms and will continue to do so as the fruit of the latter is being seen now, said Ajay Kejriwal, president, Choice Broking.
"The economy is recovering and market is responding to it,” said Kejriwal. According to him, there are three reasons that has triggered the market rally to the 35,000 mark today. To begin with, the government’s reforms undertaken in the last two years be it Jan Dhan, Aadhaar, Mobile (JAM) trinity; demonetisation and GST have begun to show positive benefits, Kejriwal said.
Secondly, though corporate earnings have not been favorable last year, the market is expecting it to do well this year. Finally, investors, who were staying away from India market so far on account of policy uncertainty and a weak economy, are slowly returning, Kejriwal said.
On account of these positive factors, there is a likelihood that the market rally will sustain, he added. "The market, after all, looks at the future,” Kejriwal said, adding the investors refuse to accept that the forthcoming Union Budget will have any negative bearing on the market rally. “The budget will be a populist budget considering the Gujarat poll results. It will not offer any thing special for the market,” say analysts. Kejriwal is upbeat about the markets doing well hereon. “There will be days which may not be as good as today but I expect the markets to do well. It may touch the 40,000 mark by December,” he said.
Analysts said strong liquidity in the market following unabated buying by foreign funds inflows and encouraging Q3 earnings by some companies lifted the mood.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 693.17 crore while domestic institutional investors (DIIs) had sold equities worth a net Rs 246.38 crore yesterday, as per provisional data.
The big gainers that helped the flagship Sensex to new peak were SBI, Axis Bank, Infosys, Adani Ports, Yes Bank, ICICI Bank, L&T, TCs, ITC Ltd, Dr Reddy's, Sun Pharma, Bajaj Auto, Power Grid, NTPC, HDFC Ltd, M&M and Tata Steel, surging up to 3.43 per cent.
Asian stocks were mixed, while European markets were down and their opening trade.
(with inputs from PTI)
Among the sectoral indices, oil & gas shed over 4 percent, while FMCG rose over 2.5 percent. BSE Midcap gained by 0.6 percent and BSE Smallcap ended flat at the closing bell
Midcap and Smallcap indices also ended in losses. Oil & gas were the top gainers, while IT was the biggest drag
Weak global trends and persistent foreign fund outflows coupled with rising crude prices led to domestic markets snapping their three-day positive streak. However, they bounced back on the back of gains in oil & gas, metal, and auto sectors.