Sensex touches 50,000 again before closing at record high

MUMBAI: Continuing budget frenzy and optimism over growth boosters proposed by the government drove a robust market rally for the second straight day on Tuesday, with the Sensex touching the 50,000-mark once again, recovering around 8% in less than a fortnight.

The BSE Sensex gained 1,197.11 points or 2.46% to close at 49,797.72 while the Nifty jumped 366.65 points or 2.57% to 14,647.85. Global peers were supportive with markets in China, Japan, Hong Kong, and South Korea rising around 1%.

Despite the heated valuation concerns, analysts are optimistic that the capex increase and supply side reforms will lead to a quicker economic revival.

“The budget was more positive for equities, less so for bonds given larger-than-expected supply and the slower pace of deficit normalization,” said Goldman

Sachs in a note on February 2.

Kotak Securities has upgraded its target on both Sensex and Nifty to 51,000 and 15,000 respectively by December on expectations of more earnings upgrades following the budget.

Some analysts fear that global rating agencies may view the budget slightly negatively, given their focus on medium-term fiscal finances. Nomura believes the budget may have increased the probability of a downgrade from Fitch.