SENSEX MOVES CLOSER TO 50K ON US STIMULUS HOPE
The equity benchmarks galloped to fresh lifetime highs on Wednesday, in lockstep with global markets which surged ahead of US President-elect Joe Biden's inauguration amid expectations of fresh stimulus by the incoming administration. Rallying for the second straight day, the 30-share BSE Sensex advanced by 393.83 or 0.80 per cent to close at 49,792.12. The broader NSE Nifty jumped 123.55 points or
0.85 per cent to settle at 14,644.70.
The equity benchmarks galloped to fresh lifetime highs on Wednesday, in lockstep with global markets which surged ahead of US President-elect Joe Biden's inauguration amid expectations of fresh stimulus by the incoming administration.
Rallying for the second straight day, the 30-share BSE Sensex advanced by 393.83 or 0.80 per cent to close at 49,792.12.
The broader NSE Nifty jumped 123.55 points or 0.85 per cent to settle at 14,644.70.
World stocks, too, advanced after US Treasury Secretary nominee Janet Yellen called for a hefty stimulus to protect the US economy. Biden, who will be sworn into office on Wednesday, has laid out a $1.9-trillion stimulus package proposal to boost the economy.
"Janet Yellen's statement that the United States needs a big stimulus push has pumped markets across the globe, including India," said Ajit Mishra, vice president, research at Religare Broking.
Also moving the markets were expectations of positive announcements from India's upcoming budget and encouraging corporate earnings, Mishra said.
Reliance Industries rose 1.9 per cent and was the top boost to the Nifty 50 index. The oil-to-telecom conglomerate has gained nearly 6 per cent this week ahead of its December-quarter results on Friday.
The Nifty IT index added 2.2 per cent, the top boost to the Nifty index, with Infosys and TCS rising 1.7 per cent and 1.5 per cent, respectively. The index gained about 55 per cent in 2020 and about 9.8 per cent, so far, this year.
Hurdle in Sensex’s march
Investors, however, hoping the Sensex breaches the 50,000 level for the first time may have to contend with a market that is looking overbought. The Indian gauge’s 14-day relative strength index -- a technical indicator of the magnitude and persistence of price movements -- has been flip-flopping above and below the 70 level since November, a signal that its rally is overheating. On top of that technical barrier, investor caution around overoptimistic Indian earnings estimates, record valuations and the potential drying up of liquidity are all hurdles the benchmark is facing in hitting that magic number.
Bofa Securities, too, said it is “not as bullish" and gave a target of 15,000 points for the 50-share benchmark Nifty by the end of the newly started year. After the strong rally since April 2020, there is a limited upside in Indian equities and the markets will end 2021 with a low singledigit gain, it said.