The BSE Sensex crossed another crucial level of 49,000 and hit a fresh record high of 49,269.02 on January 11, a 16.5 percent rally from November 9, 2020 when the index touched its January 2020 record high level.
In just two months, the index surged nearly 7,000 points and almost all Sensex stocks participated in the rally, barring Reliance Industries (which fell more than 5 percent in the same period). Top three stocks in the Sensex - ONGC, Bajaj Finserv and L&T - gained more than 40 percent, while the next 10 stocks rallied 20-31 percent.
On the broader front, the BSE Midcap index crossed its previous record high level of January 2018, in January 2020, while the BSE Smallcap index is 1,100 points away from its January 2018's record highs, which clearly indicated that the rally was almost broad-based.
All the credit goes to consistent and strong FII inflow, vaccine development, hopes of economic and earnings growth, measures taken by the government and RBI to boost the economy, lower interest rates and consistent decline in COVID-19 infections.
"Market consensus that liquidity will remain abundant and interest rates low is driving the market. Risk is the consensus going wrong," VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services told Moneycontrol.
Foreign institutional investors poured in more than Rs 1 lakh crore in Indian equities in these two months though domestic institutional investors remained net sellers in the same period as they preferred booking profit.
In comparison, the scenario was completely different when the market had hit a record high in January 2020 backed by government's measures like cut in corporate tax rate. The participation was seen from only top few stocks and the broader markets largely underperformed at that time, trading far below their January 2018's record high levels.
In the two-month period, nearly 97 percent of stocks in the BSE 500 index participated in the run up. Top 410 stocks from the index gave double-digit gains. Out of 410, four stocks - Suzlon Energy, Vakrangee, Tanla Platforms and SAIL - more than doubled, rallying 103-157 percent.
Next 33 stocks reported more than 50 percent gains. These include Hindustan Copper, Trident, SpiceJet, Vedanta, Graphite India, Wockhardt, HFCL, Indiabulls Real Estate and Shipping Corporation of India.
Major participation was seen from metals, hotels, airline, real estate, non-banking finance companies, etc. which did not participate in the rally seen till September 2020.
"We expect a strong economic recovery in the next few years as: 1) over the last few months we have seen a decent pick up in real estate sales if it sustains, construction activities can pick up, 2) NHAI awarding of road projects has been good so far this year, which should reflect in better execution from the next year, 3) PLI schemes can help revival in CAPEX investments. A pick-up in manufacturing also augurs well for job creation," Ashutosh Tiwari, Head of Research at Equirus Securities told Moneycontrol.
All sectoral indices posted double-digit gains in these two months. BSE Metal and Realty gained the most, rising 42 percent each, while Auto, Bank, Capital Goods, FMCG, Healthcare, IT and Power rallied 12-33 percent.