Sensex sets a new record
Key indices on Tuesday hit record peaks following encouraging data from another Covid-19 vaccine trial, abundant global liquidity and better-than-expected factory output from China. The 30-share Sensex crossed the 44000-mark during intra-day trade and touched a lifetime high of 44161.16 after which it gave up some of the gains to finish at 43952.71 which was still a new closing record.
The gains came as Wall Street vaulted to lifetime highs in the overnight session after US-based biotechnology giant Moderna said its Covid-19 vaccine candidate was found to be 94.5 per cent effective in Phase 3 trials.
The announcement came just a week after Pfizer and BioNtech said their vaccine was more than 90 per cent effective in preventing Covid-19, based on preliminary data. It strengthened expectations of a sharp global recovery next year even as data from China showed factory output rising more than expected.
Global liquidity with central banks following accommodative policies is one of the key factors that is driving the momentum with encouraging high frequency data improving the confidence among investors. This comes after a better-than-expected corporate earnings for the second quarter ended September 30 and reduction in fresh number of Covid-19 cases in several parts of the country.
The optimistic sentiment has seen Morgan Stanley raising its target for the Sensex to 50000 by December 2021 against an earlier target of 37300 by June 2021.
“We expect growth to surprise on the upside, rates trough to be behind, and real rates to remain in the negative territory for several months,” Morgan Stanley said.
It presented a bull case target of 59000 for the 30-share index, indicating a 35 per cent upside from the current level, assuming the virus situation improves, recovery in growth is sustained and global stimulus supports asset prices.
In a bear case scenario, it sees the Sensex fall to 37,000, a 15 per cent drop from the current level, if the virus issue lingers into 2021 and growth falters as India fails to deliver an adequate policy response leading to losses in the financial system.
The Sensex on Tuesday opened above the 44000-mark at 44095.85 and scaled an intra-day high of 44161.16, a gain of over 523 points. It gave some of the gains to close at 43952.71, up 314.73 points which was still a new closing record. The NSE Nifty touched a fresh intra-day high of 12934.05 and finally finished 93.95 points, or 0.74 per cent, up at its lifetime peak of 12874.20.
Shares of BPCL, however, dropped over 4 per cent after the government received multiple expressions of interest for stake purchase in the company even as some of the big names did not put in any initial bids. The stock fell 4.42 per cent to close at Rs 394.45 on BSE.