According to the data available on the National Stock Exchange, the index closed the previous session with a P/E multiple of 39.55 BSE Sensex hit the psychological 50,000-mark for the first time ever on Thursday. It took a little over three months for BSE Sensex to climb from 40,000 to 50,000 points, and took just nine sessions to gain 1,000 points from 49,000 points. Broader index Nifty 50 breached the crucial 14,700 level on the upside. According to the data available on the National Stock Exchange, the index closed the previous session with a P/E multiple of 39.55. According to the analysts, even as Sensex hit 50,000, there are bumps ahead. The market is likely to turn highly volatile during the Union Budget 2021.
AR Ramachandran, Co-founder & Trainer, Tips2Trade, told Financial Express Online that extreme bullish sentiment and easy money buying into equities are among other factors that have led Sensex hitting 50,000 at such rapid pace. “Technically, markets are extremely overbought and hence investors are advised to keep booking profits,” he added.
Today’s rally in BSE Sensex was fuelled by buying in index heavyweights such as Reliance Industries Ltd (RIL), Infosys, ICICI Bank, Bajaj Finance, Kotak Mahindra Bank and Axis Bank among others. The broader markets outperformed the equity benchmarks today. S&P BSE MidCap index jumped 0.69 per cent or 132 points to 19,288, while the BSE SmallCap index surged 0.68 per cent or 126.86 points to 18,870. According to the market analysts, better-than-expected October-December quarter earnings, COVID-19 vaccine rollout and other supportive global cues are fueling the up move in the equities.
According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the rally in stock markets, which is global, has been triggered by the massive liquidity injection by the central banks. This ultra-loose monetary policy of massive liquidity injection and historically low-interest rates is the response to the severe recession caused by the pandemic. Vijayakumar added that the market rally is the consequence of the pandemic. Valuations are high. “But higher valuations are partly justified since returns from fixed income are low. Lower rates means higher valuations. But now valuations are moving to risky levels which are hard to justify. It’s difficult to predict a crash or its timing. But at high valuations, markets are vulnerable to corrections,” he said.
This article is auto-generated by Algorithm Source: www.financialexpress.com
