Significant losers were Power Grid Corporation, Shree Cement, Gail, NTPC and HDFC Bank, down by 2.1%, 1.8%, 1.56%, 1.04% and 0.92%, respectively. Equities continued their record-breaking rise on Wednesday, with the Sensex ending the day a few points shy of the 50,000-mark — it rallied 393.8 points (0.8%) to close at 49,792.12. The Nifty soared 123.85 points (0.85%) to close at 14,644.7. The markets reacted to strong positive cues coming from global markets ahead of Joe Biden being sworn in as the president of the US.
Automobile companies drove the markets, with stocks such as Bajaj Auto and Eicher Motors hitting their 52-week highs. Tata Motors has rallied 38.84% in January itself. IT stocks also contributed to the gains. Major gainers on the Nifty were Tata Motors, Adani Ports and SEZ, Wipro, Tech Mahindra and Maruti Suzuki with rise of 6.09%, 4.4%, 3.4%, 2.72% and 2.55%, respectively. Significant losers were Power Grid Corporation, Shree Cement, Gail, NTPC and HDFC Bank, down by 2.1%, 1.8%, 1.56%, 1.04% and 0.92%, respectively.
Equities have been hitting record highs since November last year, which means that the markets have been making fresh records for three straight months. In March 2020, stocks hit their four-year lows with the onset of the pandemic.
The Nifty touched a low point of 7,610.25 and has rallied by 92.4% since then. When the Sensex crosses the 50,000-mark, the index would take its compounded annual growth rate returns to 15.5% for the period between 1979 and 2021.
Gaurav Dua, senior vice president, head — capital markets strategy and investments, Sharekhan by BNP Paribas, said, “The pillars of the long-term equity rally are in place with low interest rates, bank balance sheets on a mend, significant policy reforms along with the recent focus on attracting foreign investments and developing the manufacturing sector.”
Equities have received foreign portfolio inflows at $2.56 billion so far in January. Apart from low interest rates and high liquidity, the preference of global investors for emerging markets has also contributed to robust inflows. Most foreign investment banks are overweight on global equities and believe the Indian markets despite stretched valuations can deliver positive returns for 2021.
The Nifty is trading at a 12-month forward price earnings 22.4 times, which is much higher than its five-year average of 17.5 times. While Credit Suisse Wealth Management expects the markets to remain volatile, it advises investors to stay invested in equities while cutting risks to their portfolio. Siddhartha Khemka, head — retail research, Motilal Oswal Financial Services, said: “Going ahead, the market momentum could continue for a few days on the back of positive global cues and good earning season so far. However, there could be some volatility in the run-up to the Budget.”
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