Markets touch record high, Sensex closes in on 60k

Indian stocks rallied to hit new all-time highs on Thursday, pushing the benchmark Sensex past the 59,000 mark and within sniffing distance of the 60,000 milestone. The announcement of a bad bank, relief package for the telecom industry and production-linked incentive schemes for the auto sector lifted stocks.

The 30-share Sensex rose 417.96 points, or 0.71%, to 59,141.16. The National Stock Exchange’s Nifty index gained 110.05 points, or 0.63%, to 17,629.50.

The rally is mainly driven by strong buying in banking stocks, especially public sector banking, said Vinod Nair, head of research, Geojit Financial Services. “The banking sector is expected to perform well in the coming days as the sector failed to fairly participate in the ongoing rally due to fears over asset quality,” Nair said.

There has been a slew of government announcements to address challenges faced by the automobiles, telecom and banking industries.

Despite the sharp rally in the past year, analysts said the markets may go even higher.

“The current market strength seems sustainable as we see overall inflows into emerging markets,” said Amit Shah, head of India equity research at BNP Paribas. “The local non-institutional money, which had taken a back seat on account of initial public offerings, is now back. Lastly, the pace of vaccination is very encouraging, which makes for a more sustainable economic recovery. There can be some jitters in the market as and when the US Federal Reserve does begin tapering but, overall, the market is well placed to absorb that as well.”

The Indian benchmark indices have risen 23-25% this year, outperforming the MSCI World index’s 16% gain and MSCI EM’s 0.2% decline.

FIIs have pumped in $790.57 million in September while investing $7.94 billion in Indian stocks this year. However, domestic institutional investors were net sellers of shares worth ₹237.57 crore in this month but net buyers of ₹22,126 crore in 2021.

Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services Ltd, cautioned that the markets may be volatile on account of fragile global cues, worry over slower economic growth and rising Delta variant cases globally. “Investors are cautious ahead of next week’s Fed meeting, awaiting indications on when the central bank will start withdrawing its stimulus and start raising interest rates eventually,” Khemka said.