Nifty hits new peak, Sensex nears 30,000

But only eight stocks in NSE index hit lifetime highs

The Nifty50 index closed at an all-time high of 9,306 on Tuesday, up 89 points, or 1 per cent, buoyed by the outcome of the first round of the French elections and March quarter earnings of index heavyweights.

The S&P BSE Sensex also moved up 1 per cent, or 287 points, to settle at 29,943.

The Nifty50 has gained nearly 13.7 per cent since January. The rally has been fuelled by fresh investments in the equity segment by foreign institutional investors (FIIs) and foreign portfolio investors (FPIs). It has been to the tune of ~41,787 crore till April 25, with March alone accounting for ~30,906 crore, the NSDL data showed.

However, only eight of the 51 stocks that make up the index are at their respective peaks. These are Housing Development Finance Corporation (HDFC), HDFC Bank, UltraTech Cement, Gail (India), Grasim Industries, Indiabulls Housing Finance, Kotak Mahindra Bank and IndusInd Bank.

Besides these eight, Reliance Industries (RIL) and Larsen & Toubro (L&T) hit 52-week highs on Tuesday. Despite this, RIL is still 14 per cent away from its all-time high of ~1,649 that it hit in 2008.

Heavyweights such as Infosys, Tata Consultancy Services (TCS), Hindustan Unilever (HUL), RIL, ICICI Bank, Oil and Natural Gas Corporation (ONGC) and Wipro are some of the stocks that are far from all-time highs.

“There has been a change in market leaders. In 2014, the rally was led by pharmaceutical and information technology (IT) stocks. The baton has been passed on to RIL and banking sector stocks. Though stocks from the fast-moving consumer goods (FMCG) segment did not participate, index heavyweight ITC provided support,” said A K Prabhakar, head of research at IDBI Capital.

Of the index stocks at their peak, the rally in some has been driven by news. The recent spurt in HDFC Bank, UltraTech Cement and Indiabulls Housing Finance has been on account of March quarter results that rekindled investor interest.

The Nifty50 closed above 9,000 points for the first time on March 14 this year, crossing its previous all-time high of 8,996 made in March 2015. The Sensex had crossed its 2015 high of 29,682 points earlier this month, and at 29,943 points, it is just a few points away from the 30,000-point mark.

“One reason for the Nifty50 reaching its alltime high is the rally in stocks that have a high weight in the index, such as HDFC and HDFC Bank. That apart a large part of the upmove has been on account of RIL. It has moved nearly 40 per cent over the past few months,” said Kunj Bansal, executive director and chief investment officer at Centrum Wealth Management.

“The rally in these stocks could also be driven by the fact that we are now closer to the derivative expiry for the April series. So traders could be covering their short positions after results announcements,” he added.

The results momentum and management commentary about FY18 earnings would be key because valuations did not offer much comfort from here on, analysts said.

“Valuations certainly aren’t cheap. We are currently trading at around 17.5 times FY18 earnings, which is nearly 15 per cent above historical average. What the market is hoping for is earnings recovery, which will justify the market valuation. For the market to deliver returns from here on, earnings revival is key,” said Jyotivardhan Jaipuria, founder and managing director, Veda Investment Managers.

In the short-term, Prabhakar of IDBI Capital expects the momentum to take the Nifty50 index to 9,600-levels. He sees the index at around 12,000-levels by the end of FY18. “The index has seen a breakout after two years and the uptrend is likely to continue over the long term, if domestic and global variables remain supportive. Sectors that have been laggards, especially IT, could see a turnaround,” he said. Centrum Wealth Management’s Bansal, however, expects continued support from the banking sector and RIL, if the markets are to move higher from here on.

Besides the Nifty50, several other broader market indices such as the 100-, 200- and 500stock indices of both the BSE and NSE, and the mid-cap and small-cap indices, closed at their all-time highs on Tuesday.