The BSE barometer Sensex scripted history on Thursday, January 21, when it scaled Mount 50,000 for the first time. The 30-pack index galloped from 40,000-mark hit on October 8, 2020 to 50,000 in just 74 sessions and from 45,000 level (scaled on November 4, 2020) in mere 32 trading days.
When the index had plummeted to the lows of 25,000 at the peak of the Covid-19 crisis, there was little to no one who had envisaged such a meteoric rise from the index’s three-year low. A plethora of factors have fuelled such a rally in the index, ranging from liquidity push by the central bankers to FII buying, and recovery in economic growth.
Latest developments on the Covid-19 vaccine front and a change of guard in the United States too lent confidence to investors to keep ploughing money in the market.
“It is a momentous day for India’s capital markets as the Sensex touched 50,000 on January 21. The gain of the last 5,000 points has come in just 32 trading sessions. Expectations of a turnaround in the economy post-Covid vaccinations and continued FPI inflows have led to this kind of gains for Indian markets in a globally low-interest scenario,” says Deepak Jasani, head of retail research at HDFC Securities.
During the 74 sessions, the market capitalisation of the listed firms on BSE soared by Rs 38.55 trillion to Rs 199 trillion.
Meanwhile, four Sensex stocks offered returns of over 50 per cent between October 8 and January 20, with public sector lender State Bank of India (SBI) leading the charge with 57.98 per cent rise. It was closely followed by Larsen & Toubro (L&T) that added 56.86 per cent. Today, SBI was marginally down while L&T gained half-a-per cent.
Other two stocks that soared over 50 per cent were IndusInd Bank (up 53.48 per cent) and Bajaj Finserv (up 52.21 per cent). They were closely trailed by two more stocks from the financials space – Bajaj Finance and Axis Bank – that added 49 per cent each. The rally in banks comes despite a warning by the Reserve Bank of India about a possible rise in non-performing assets (NPAs) at Indian banks by September 2021. READ ABOUT IT HERE
One of the best Sensex performers of all time Reliance Industries was the worst performer during this period and shed over 8 per cent. However, from its 52-week low of Rs 868 scaled in March last year, the stock has soared 137 per cent.
According to the publically available data on Reuters, 32 analysts covering the stock have a consensus ‘Hold’ rating on it. The firm is set to announce its Q3 numbers for FY21 on January 22. READ HERE
Besides RIL, one other firm featured on the losers’ list – Dr Reddy’s Laboratories. The stock shed over 2 per cent.
Going ahead, all eyes would be on the Budget and global cues for further direction of the index. Some analysts are, however, concerned about the valuations and believe they look stretched at this juncture. “As the sensex crosses the 50k, the valuations do look stretched. The valuations are a function of earnings and earnings not coming through remains the key risk at the current juncture,” said Joseph Thomas, Head Of Research at Emkay Wealth Management. CLICK HERE TO READ ABOUT INVESTMENT STRATEGY FROM HEREON!