Benchmarks hit their all-time highs on Tuesday with the Nifty sailing past the 13,000 mark for the first time ever. The market’s exuberance has been backed by a strong rally in the global markets after positive news flow around Covid-19 vaccine. Record high inflows from foreign investors in November have also helped the Nifty cross the 13,000 mark. The 50-share Nifty rose by 128.7 points (1%) to close at 13,055.15 whereas the Sensex rose by 445.87 points (1.01%) to close at 44523.02.
The rally has been driven by banking stocks with the Nifty Bank rising by 2.46% during the day’s trade. Financial stocks have been playing catch-up in November with the Nifty Bank rallying by 19.46% till November 24. The biggest gainers on the Nifty Bank were RBL Bank, Axis Bank, HDFC Bank, State Bank of India, and ICICI Bank up by 6.02%, 3.93%, 3.54%, 2.39%, and 2.30%. The banking indices have also been rallying after the Reserve Bank of India’s working group suggested reforms to the banking sector such as allowing corporates to own banks.
The markets have been propelled higher, thanks to robust foreign inflows this November with foreign portfolio investors (FPIs) pumping in $7.3 billion. Asian markets except China have seen fastest growth in their foreign inflows this quarter with the foreign inflows being the highest since 2013, according to Bloomberg. The agency stated that since October 1, Japan has led the way with inflows at $27.4 billion, followed by India at $9.2 billion. South Korea has received $6.4 billion and its benchmarks have also touched all-time highs in November. Many global financial services firms such as Credit Suisse are overweight on emerging market equities which they have stated will be helped by the near term liquidity and strong quarterly earnings. Morgan Stanley has a 50,000 target for Sensex in 2021.
Sanjeev Hota, head of research, Sharekhan by BNP Paribas, said, “With the gush of liquidity that is coming in the valuations of the Nifty looks optically high, but still looks reasonable as we are still in the early cycle of strong earning recovery. I expect that the mid and smallcap stocks will outperform next year. This is because they have all the right ingredients to do so since they have not run up as much as Nifty.”
The stock markets in Hong Kong, South Korea, and Japan were up between 0.3% to 2.5%. European bourses in countries such as Germany, France, and the United Kingdom were up between 0.95% to 1.15%. The Dow Jones mini futures were up by 302 points at the time of press.
The risk-on mood on Tuesday was supported after Oxford-AstraZeneca announced that their vaccine had 90% efficacy. Apart from Oxford-AstraZeneca companies such as Pfizer and Moderna have also reported high efficacy with respect to their vaccines. Hemang Jani, head – equity strategy, broking and distribution, Motilal Oswal Financial Services, said, “Indian indices opened on record-high levels on Tuesday on the back of the progress made on the Covid-19 vaccine and the prospects for a speedy global economic revival. Another factor that has contributed to the new highs is the blockbuster performance of corporates in Q2 FY21. Nifty can possibly touch 13200-13400 levels also but it depends on the sustainability of the economic growth over the next few months post festive season.”
The futures and options segment on NSE saw a turnover worth Rs 20.5 lakh crore whereas, the cash market saw a turnover worth Rs 66,473.16 crore. This is against the six month average of Rs 19.2 lakh crore and Rs 52,327.79 crore. The biggest gainers on the Nifty were Adani Ports and SEZ, Axis Bank, HDFC Bank, Eicher Motors, and Hindalco up by 4.46%, 3.93%, 3.54%, 3.52%, and 3.44%. The biggest losers were Titan Company, HDFC, BPCL, Nestle India, and GAIL down by 1.45%, 1.37%, 1.17%, 0.85%, and 0.79%.