Revival hopes pushNiftytoanew high
Rally may continue after fourth quarter GDP data confirmed growth momentum
MUMBAI: Markets began the week on a firm note with the Nifty scaling a fresh high on Monday on optimism about faster-than-expected recovery of the economy.
The Nifty edged 147.15 points or 0.95% higher to 15,582.80. The BSE Sensex was up 514.56 points or 1% at 51,937.44. Other markets in the Asia-Pacific region were mixed with Shanghai composite rising 0.41% while Hong Kong’s Hang Seng index fell about 0.2%.
The GDP data for the fourth quarter of fiscal 2021 and the full year indicated that unlocking of operations drove growth for two quarters, confirming that momentum had started to build in since Q3FY21.
“The markets were awaiting India’s GDP and fiscal deficit number which has come in better than expectation. The overall structure of the market remains positive as fresh covid cases continue to decline and investors are upbeat about unlocking of economy in June which will help revive commercial activities. Hopes of further stimulus by government is also bolstering investor confidence,” Siddhartha Khemka, Head Retail Research, Motilal Oswal Financial Services said.
The GDP growth print for FY21 and Q4FY21 was at -7.3% and 1.6% respectively. Fiscal deficit for FY21 was at 9.3% of the GDP, lower than 9.5% estimated by the Finance Ministry.
According to Radhika Rao, Economist, DBS Bank Ltd said, essence of the March quarter growth numbers is that the trend benefited from a nearly linear unlocking process from the first Covid wave, with upside surprise concentrated in a modest return in consumption, strong construction rebound, and manufacturing output.
“Cases have tapered off in recent weeks, however in contrast to last year, the unlocking process won’t be linear, as states exercise more discretion, making the unwinding in restrictions more staggered and less predictable. We maintain our FY22 growth projection at 9.5% year-on-year from a revised -7.3% in FY21,” said Rao.
Meanwhile, India volatility index or VIX fell further by 2.97% to 16.89 levels, which is at a 65-week low.
According to Kotak Institutional Equities research, historically, all-time highs are followed by periods of decent returns. Since 2004, Nifty has formed new all-time highs close to 350 times. The average 10-day, 22-day and 66-day returns after reaching the alltime high are 30 bps, 80 bps and 2.9% respectively. The median 10-day, 22-day and 66-day returns after reaching the alltime high are 90 bps, 70 bps and 3.4% respectively.
Reliance was the top gainer in the Sensex pack, surging over 3%, followed by ICICI Bank, Bharti Airtel, Dr Reddy, Maruti and ITC.
On the other hand, M&M, Infosys, IndusInd Bank, L&T, and Sun Pharma were among the laggards.
Of these, shares of M&M slipped 7% to ₹790 on the BSE in intra-day trade on Monday after the management said the tractor industry is expected to grow in low single-digits during the financial year 2021-22 (FY22), with the company focused on gaining market share.
Meanwhile, international oil benchmark Brent crude surged 1.08% to trade at $69.46 per barrel. Equities in Europe were trading on a mixed note in midsession deals.