Sensex creates history, closes above 50,000-mark

The Sensex closed above the historic 50,000-mark for the first time ever on Wednesday as the post-Budget rally continued for the third straight session. The BSE benchmark rallied 458.03 points (0.92%) to close at 50,255.75. The Nifty rose by 142.1 points (0.97%) to close at 14,789.95. Investors have added wealth of over Rs 12 lakh crore in the last three sessions as the BSE’s market capitalization is nearing Rs 200 lakh crore thanks to FPIs turning buyers, strong quarterly results and a post-Budget optimism.

The broader markets, too, participated in Wednesday’s rally, with the Nifty Midcap hitting a record high. The Nifty Midcap 100 and the Nifty Smallcap 100 rose by 1.45% and 1.2%. The midcap index so far this year has gained by 7.6%. The Nifty Smallcap index is also approaching its highest level in two years.

Another index that hit yet a lifetime high was the Nifty Bank, which rallied by 1.43%. Its biggest gainers were IndusInd Bank, Punjab National Bank, RBL Bank, Bank of Baroda and Axis Bank with gains of 7.29%, 6.49%, 5.53%, 3.42%, and 2.39%, respectively.

Meanwhile, the market’s fear gauge or India VIX (volatility index) has fallen in the last three trading sessions and is close to the levels seen earlier in January. Last Friday, the India VIX closed at 25.34 whereas, as of Wednesday’s close it was 23.75.

Foreign portfolio investors have once again started pumping money into stocks. In the previous two trading sessions, they bought stocks worth $1.1 billion. Besides a favourable Budget, strong third quarter results so far have also contributed to the ‘risk-on’ sentiment on the Street. The benchmarks have risen by 8.2% in the last three sessions, the sharpest rally in the last 10 months.

Jaideep Hansraj, managing director and CEO, Kotak Securities, said: “The Budget is fuelling a rally in all economy-driven sectors along with banking. The uptick in global markets, resumption of FII flows and strong earnings trend coming from Q3 results are other factors that are taking markets higher.” Additionally, stocks belonging to the financial, pharmaceutical and energy sectors rose the most.

Foreign investment banks are looking favourably towards the Budget, but have highlighted some concerns with respect to equities. In its report, Nomura said, “Our key concern remains inflationary pressure and its impact on EBITDA margin. We remain selective on Indian equities.” It, however, said from the perspective of the equity markets, the Budget is a positive, as it helps improve the narrative on growth. To that extent, the risk to current earnings expectations reduces, according to Nomura.

Strong global markets also helped the rally, with bourses in the UK, Germany, and France rising between 0.03% and 0.27%. The Asian markets in Taiwan, Hong Kong, and South Korea closed the session higher by 0.07% to 1.06%.