Healthy buying across-the-board lifted market benchmarks - the Sensex and the Nifty - to record high levels yet again on February 15.
In intraday trade, the 30-share pack Sensex jumped 692 points to hit the record high of 52,235.97. Nifty, too, made a fresh peak of 15,340.15. At close, Sensex was 610 points, or 1.18 percent, up at 52,154.13 while Nifty was at 15,314.70, up 151 points or 1 percent.
The BSE Midcap and Smallcap indices ended 1.40 and 0.37 percent higher, respectively.
"The recent consolidation in the index is in line with expectations but there’s no sign of exhaustion yet. With earnings season largely behind us, global cues will dictate the market trend ahead. A decisive break above 15,250 would pave way for 15,500 levels in Nifty. We would remain cautiously optimistic on markets," said Ajit Mishra, VP - Research, Religare Broking.
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Here are 5 key triggers that pushed the market to record high levels:
1. Positive global sentiment:
The Indian market rose in sync with its top global peers that traded with healthy gains as the global rollout of the COVID-19 vaccine raised hopes of a faster economic recovery while reports of fresh US stimulus also boosted sentiment.
Japan’s Nikkei climbed more than a percent. China and Hong Kong markets are shut for the Lunar New Year holiday. US markets will be closed on February 15 for the Presidents Day holiday.
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2. Strong buying in banks, financials:
Strong gains in baking and financial heavyweights boosted the market benchmarks as these two sectors have the highest weight in Nifty and Sensex.
ICICI Bank, HDFC twins, Kotak Mahindra Bank, Bajaj Finance and Axis Bank were the top contributors to the rally in Sensex.
Nifty Bank and Nifty Financial Services indices hit their fresh record high of 37,449.90 and 17,556.05, respectively, in intraday trade.
3. Signs of economic recovery:
Index of Industrial Production (IIP) for the month of December turned positive again and showed an expansion of 1 percent, primarily led by basic metals, pharmaceutical and petrochemical products, and overall positive growth in the manufacturing sector.
This comes after IIP had contracted by 1.9 percent in November. It had expanded in October and September after six straight months of contraction due to COVID-19. Analysts had then termed this a temporary blip.
Besides, the consumer price index (CPI)-based inflation, the key price indicator used by the monetary policy committee (MPC) for policy formulation, fell to a lower-than-expected 4.06 percent in January compared with 4.59 percent in December.
Analysts pointed out that the fall in CPI and the rise in IIP are positive for the market.
"CPI inflation for January at 4.06 percent and the rebound in IIP are positive news for the market. The important take away from this and other important data pertaining to credit growth, IIP, electricity consumption, e-way bills, GST collections and sales of commodities like cement and autos is that the growth recovery is gaining momentum," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
"If this trend is sustained, corporate profits will surprise on the upside in FY22, bringing the stock valuations down."
4. FPI inflows:
Strong capital inflow from the foreign portfolio investors (FPIs) is keeping the market high.
As per data available with NSDL, FPIs have pumped in Rs 21,904 crore in the Indian financial market in February so far.
With adequate liquidity and amid signs of faster economic recovery, India is among the top emerging markets that have been witnessing a strong FPI inflow of late.
5. Q3 earnings to trigger more upgrades:
The market is also bullish on the prospects of earnings upgrades, thanks to the stellar Q3 earnings.
The December quarter earnings, so far, have seen more hits than misses due to a recovery in demand after the opening up of the economy and the significant drop in coronavirus infections.
The cost-saving initiatives and the festival season demand also helped India Inc to post a strong quarterly scorecard. The Q3FY21 earnings have maintained the momentum of the previous quarter.
"There has been a 3.9 percent/2 percent upgrade in FY21/FY22E Nifty EPS estimates to Rs 536/Rs 713 (from Rs 516/Rs 699). We are now building in Nifty EPS growth of 15 percent for FY21E," said Motilal Oswal Financial Services.
As per brokerage firm YES SECURITIES, PBT growth of NSE200 stood at 53 percent year-on-year (YoY), excluding financials and telecom at 41 percent.
"Revenue de‐growth (excluding finance) at 0.4 percent – significantly better than the preceding quarters of FY21, thanks to strong volume recovery in both urban and rural markets on a sequential basis, accompanied with sustained price hikes," said the brokerage.
"Consensus FY22 Nifty50 EPS witness further upgrades, this comes after a healthy upside revision during Q2 earnings results. Sequential earnings upgrade has been quite rare, the first time since Q2FY15. The interest coverage ratio for NSE200, improved to 4.7 times, depicting the most favourable situation for enterprises in the last 12 quarters," YES SECURITIES said.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.