Favourable FOMC meeting outcome leads Sensex, Nifty to new highs

Bulls kept their hold on the market on Thursday with Sensex, Nifty surging to new highs. The rally was broad-based, with mid-caps and small-caps also witnessing sustained buying. However, the volatility index too gained, signalling some cautiousness among investors.

The market opened on a positive note, tracking global cues and gained further. The US markets gained overnight after US Federal Reserve Chair Jerome Powell’s statement that the US central bank could begin scaling back asset purchases in November and complete the process by mid-2022, as expected by market participants. The domestic market extended gains, witnessing all around buying.

The BSE Sensex is inching closer towards 60,000, recording a fresh all-time high of 59,957.25. It closed at a record high of 59,885.36, up 958.03 points or 1.63 per cent. It hit an intraday low of 59,243.15. The Nifty 50, after surpassing the 17,800-mark with a fresh all-time high of 17,843.90, closed at a record 17,822.95, up 276.30 points or 1.57 per cent. It hit an intraday low of 17,646.55.

Breadth remains positive

The breadth of the market remained positive as 1,974 stocks advanced on the BSE, as compared to 1,266 declined while 163 remained unchanged. Furthermore, 333 stocks hit the upper circuit as compared to the 168 stocks that were locked in the lower circuit. Besides, 254 stocks touched a 52-week high level and 15 touched a 52-week low.

Devang Mehta, Head – Equity Advisory, Centrum Broking, said, "The market took the US Fed statement of starting tapering as soon as November in its stride. Encouraging news on Evergrande crisis also helped to clear some uncertainty on the global front.”

“Indian markets have been on a roll & the rally today was symbolic of the prevailing strong sentiment locally on the back of reduction in covid cases & the strong vaccination numbers. With improvement in economic activity & the optimism around the capex cycle revival, the earnings trajectory for India Inc will naturally get a big boost. Most of the companies which are market leaders in their respective domains have seen operating efficiencies & productivity improve & also been able to reduce debt with prominent gain in market share as well. Liquidity remains extremely strong, be it Foreign portfolio investors, Local mutual funds, Insurance companies, Family offices, HNI’s or even the retail investors,” added Mehta.

Bajaj Finserv, Hindalco, L&T, Tata Motors and Coal India were the top gainers on the Nifty 50 today while HDFC Life, Dr Reddy’s, JSW Steel, Tata Consumer and ITC were the top laggards.

Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi Shares & Stock Brokers said, “Indian markets started on a positive note following positive Asian markets cues as US Fed's comments on upcoming tapering in which it said it was not ready to taper monetary stimulus yet, pushing the timeline further towards year end. During the afternoon session markets continued to trade in fine contour on continued buying by funds and retail investors amid strong global cues.”

"This ferocious bull market continues to baffle both bears and bulls. Stock markets are all about ups and downs. But this bull market has been an almost one-way street for almost 18 months now. More importantly, this is almost a global phenomenon with China, Hong Kong and a few other countries being the exceptions. The mother market US is leading from the front, ignoring even tapering indications from the Fed. All previous bull markets in India - 1992-92, 1994, 1998-2000, 2003-07 - had big corrections of 5%, 10%, even 20%. But not now so far. But this will change and the market will correct, perhaps soon, since valuations are hard to justify, said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services

Realty stocks extend rally

On the sectoral front, all indices, except Nifty Media closed in the green.

Realty stocks extended rally for the second consecutive session with Nifty Realty ending 8.66 per cent higher.

Binod Modi, Head Strategy at Reliance Securities said, “Nifty realty again surged over 10% today with strong momentum in real estate stocks as expectations of strong earnings in subsequent quarters led by visible volume upticks and sustained low-interest rate scenario bolstered investors’ confidence about real estate stocks.”

According to Sharad Agrawal, Executive Director – Capital Markets, Knight Frank India, “Indian real estate market is regaining the confidence of the global institutional investors. They see good opportunities in India across the capital stack on both the equity and debt side. Although India remains credit-starved, the space left by the NBFCs is being filled by global credit funds who are becoming quite active in the country. “

“With the declining interest rates in India and cap rate compression, the interest rate gap between overseas and domestic market is narrowing which is opening newer avenues of investments. The long-term view on India is one of uptrend on commercial absorption on the back of increasing pace of vaccination, which will translate into a strong H2 of FY22,” added Agrawal.

Financials, metals, consumer durables and oil & gas also recorded higher gains.

Nifty Bank and Nifty Financial Services were up 2.24 per cent and 2.28 per cent at closing, respectively. Nifty Private Bank and Nifty PSU Bank were trading 2.10 per cent and 1.19 per cent higher, respectively. Nifty Metal was up 1.65 per cent. Nifty Consumer Durables was up 1.50 per cent while Nifty Oil & Gas was up 1.71 per cent.

Meanwhile, after surging over 13 per cent in the previous session, Nifty Media was down 1.71 per cent.

Broader indices

Broader indices were also in the green as the rally extended to midcaps and smallcaps as well.

Nifty Midcap 50 was up 1.28 per cent at closing while Nifty Smallcap 50 was up 0.77 per cent. The S&P BSE Midcap was up 1.28 per cent while the S&P BSE Smallcap was up 0.91 per cent.

The volatility index rose 0.66 per cent to 16.60.

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