Market rally adds Rs 3.3 lakh crore of wealth to investors' kitty

The market seems to be celebrating Holi early, with bulls back with a vengeance, helping the benchmark indices post their biggest single-day rally in the last 16 weeks on March 3.

The fundraising by Adani Group via block deals with Goldman Sachs and GQG Partners added to the confidence among market participants. Also, strong India and China services PMI data and positive global cues lifted sentiment.

The BSE Sensex rallied 900 points or 1.53 percent to 59,809, while the Nifty50 climbed 272 points or 1.57 percent, the biggest single-day rally since November 11 last year, to 17,594.

Buying was seen across sectors with the Nifty PSU Bank index gaining the most with an over 5 percent rally especially after Adani Group's fundraising. The Nifty Metal index rallied 3.5 percent, while the Nifty Private Bank index was up 1.6 percent.

Investors' wealth increased by Rs 3.3 lakh crore on Friday, as the BSE market capitalisation jumped to Rs 263.30 lakh crore, up from Rs 259.99 lakh crore in the previous session.

"Adani group development will also lead to better sentiments for the market and increase retail participation, which was down due to uncertainty. The investment also leads to a belief that Adani group stocks have stabilised and can raise capital if they want at current prices," said Naveen Kulkarni, chief investment officer at Axis Securities.

He added that this development should support banks, especially public sector ones that were hammered earlier despite good performance due to fears of their exposure to the Adani group.

Adani Enterprises was the top gainer among the group, rising 17 percent, followed by Adani Ports with nearly 10 percent gains. Ambuja Cements, Adani Green Energy, Adani Transmission, Adani Total Gas, Adani Wilmar, ACC and Adani Power gained 5 percent each.

Overall, after hitting the current year’s low on February 28, the Nifty50 recovered nearly 2 percent losses and volatility as measured by the NSE Vix index also cooled considerably to 12 levels, falling by 6 percent, but experts are still not convinced about the current rally given the risk of ongoing policy tightening by central banks.

"We expect the markets to have a short-term bounce due to increased optimism, but are still concerned about global interest rates and higher valuations, which can lead to increased medium-term volatility," Kulkarni said.

He advised investors to maintain investment discipline and keep investing regularly in equities for long-term wealth creation, especially if the markets are volatile in the short to medium term.

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