The bull run seen in the equity markets showed no signs of tiring on Wednesday as benchmarks Sensex and Nifty not only hit fresh record highs but also were within striking distance of Mount 70000 and 21000, respectively, amid a rally in heavyweights and persistent FII inflows.
The 30-share Sensex rallied 357.59 points, or 0.52 per cent, to settle at a new record of 69653.73, hitting a new intra-day high of 69744.62.
The gauge is thus only 346 points away from hitting the 70000 mark. On the other hand, the broader Nifty came very close to touching 21000 as it climbed 82.60 points, or 0.40 per cent, to close at a fresh peak of 20937.70. During intra-day trades, the index scaled a high of 20,961.95.
Analysts said that while the euphoria of the BJP’s victory in three states remains on the markets, other factors are resulting in prices heading northwards.
These include stable crude oil prices, expectations that the Reserve Bank of India (RBI) will stand pat on interest rates this Friday and increased FPI (foreign portfolio investor) participation in December.
So far this month, they have made net investments of nearly Rs 26,759 crore which is almost three times of Rs 9,000 crore made in the previous month. However, their participation is expected to moderate in the coming days due to the Christmas holidays.
While the current rally has been notable for the gains in small and midcap stocks, experts feel the attention will shift to their largecap peers.
``With the RBI’s two-day meeting commencing on Wednesday, investors will focus on the governor’s commentary and a clue for a rate cut. Thus, rate-sensitive sectors will remain in focus,” Siddhartha Khemka, head — of retail research, at Motilal Oswal Financial Services, said.
“Despite this sharp up-move, Nifty is trading at a 12-month forward P/E (price to earnings) ratio of 18.4 times, which is at a 9 per cent discount versus its long-period average (LPA). Hence, we expect the focus to shift towards the large-cap stocks,’’ Khemka said.
The Nifty Bank index which has risen sharply since Monday witnessed profit booking and it closed with losses of 177.70 points or 0.38 per cent to 46834.55. On Tuesday, it had settled at 47012.25.
The drop came as constituents such as IndusInd Bank, SBI, Kotak Mahindra Bank, Bank of Baroda, ICICI Bank and AU Small Finance Bank closed with losses of up to 1.83 per cent.
On the other hand, IDFC First Bank, PNB and HDFC Bank gained up to 1.34 per cent which otherwise prevented a more sharper fall. Similarly, the S&P BSE Bankex declined 0.50 per cent or 267.05 points to close at 52911.27.