The market is riding high on the liquidity wave that has not only helped Indian shares recover losses suffered during the coronavirus-led crash in late March but has also lifted the Nifty to a new high of 13,000.
The index saw its worst showing in more than four years when it sank to 7,511 on March 24 amid fears of economic and earnings loss. It, however, started to recover within days and gained more than 73 percent to hit 13,048.75 on November 24, exactly after eight months. The BSE Sensex, too, scaled a new peak of 44,499.62.
Better-than-expected September quarter earnings, consistent improvement in economic data and positive news on coronavirus vaccine trials also aided the rally.
Also read: Nifty climbs 13,000, Sensex jumps 300 pts; 5 factors that are supporting the up move
"Indian indices opened on record-high levels on Tuesday, tracking gains in Asian peers, on the back of the progress made on the COVID-19 vaccine and the prospects of a speedy global economic revival," Hemang Jani, Head - Equity Strategy-Broking & Distribution at Motilal Oswal Financial Services told Moneycontrol.
Broader markets have also participated in the run as the Nifty midcap index is up more than 75 percent and smallcap over 87 percent. IT is the biggest gainer among sectors with a 97 percent jump followed by auto, bank, energy, pharma, infra and metal, which have gained 63-90 percent in eight months.
A look at the Nifty500 index shows that almost all segments participated in the rally. As many as 97 percent stocks from the index have shown positive returns and 94 percent have registered double-digit returns from lows of March.
Also read: Nifty tops 13,000, up 73% since March lows; how did it get there and what lies ahead?
More than 300 stocks reported more than 50 percent gains, while the top 141 gave 100-773 percent returns in eight months.
The list of 141 includes Adani Green Energy, Laurus Labs, Birlasoft, Dixon Technologies, Vodafone Idea, Firstsource Solutions, Affle India, Aurobindo Pharma, Infibeam Avenues, Coforge, Motherson Sumi Systems, Ashok Leyland, Emami, IRB Infrastructure, Just Dial, Graphite India, PNB Housing Finance, Allcargo Logistics, Quess Corp, Cyient, SpiceJet, Amber Enterprises, Finolex Industries, Manappuram Finance, Sobha and Jubilant Foodworks.
Even stocks that are part of Nifty50, including Tata Motors, IndusInd Bank, Hindalco Industries, M&M, Reliance Industries, Infosys, Bajaj Finance, Wipro, HCL Technologies and Tata Steel, gained 100-157 percent from March.
Foreign institutional investors (FIIs), too, have driven the rally as they invested nearly Rs 51,000 crore in November alone, the largest ever inflow in a single month that took the total inflow in the 2020 calendar year to more than Rs 93,000 crore.
In fact, the largest ever outflow—Rs 62,433.51 crore in March—in a single month was also in 2020. Inflows are expected to continue in the coming months, with central banks promising to provide liquidity support to revive economies, experts say.
"The inflow increased considerably, especially after the end of the election in the United States and weakness in the dollar index. Another major reason behind such a large inflow was the expected stimulus worth trillions of dollars from central banks to revive economies that are hit hard by the COVID-led lockdown," Hemang Jani said.
Jani said the Nifty could touch 13,200-13,400 with the consistent foreign fund inflows but favoured booking profits partially and sitting on 15-20 percent cash so that during a correction, funds could be deployed at lower levels.