Stocks

Longest bull run: Sensex closes in on 50,000 mark

Our Bureau Mumbai | Updated on January 12, 2021 Published on January 12, 2021

90% rise in just nine months; buying by FPIs and surge in SIPs behind the rally

The Sensex is closing in on the 50,000 mark. On Tuesday, the index rose 247 points, or 0.5 per cent, to close at 49,517. The Sensex has witnessed one of its longest rallies by gaining more than 90 per cent in just nine months, from the lows in March 2020 on the back of the Covid pandemic.

The market rally in the past two months can be attributed mainly to the sharp rise in systematic investment plans (SIPs) of mutual funds and buying by foreign portfolio investors. Data from Association of Mutual Funds in India (AMFI) showed that fresh SIP registrations in December 2020 surged 34 per cent to 14.22 lakh compared to 10.63 lakh last November.

 

However, the number of SIPs discontinued rose marginally to 7.26 lakh in December from 7.24 in November. The SIP closure ratio (stopped SIPs/fresh SIPs) fell to 54 per cent, which was starkly below the 70-80 per cent range in the previous months. Such data defused talks of an ailing economy, analysts said.

BSE’s Mutual Fund Platform Star MF witnessed a record one-day transaction of ₹14.69-lakh crore on Tuesday. The BSE is now the seventh largest market cap in the world.

FPIs on buying spree

FPIs purchased stocks worth ₹1.13-lakh crore ($15.13 billion) in the cash segment in November and December 2020 alone. In January, their purchases so far have been ₹12,974 crore ($1.72 billion). It has been one of the most bullish periods for Indian stock markets since the financial crisis of 2008, analysts said.

Data mined by BusinessLine show that the index took just 200 trading sessions to rise more than 90 per cent from its March low of 25,639 points. The rise in m-cap was ₹48,000 crore ($6.4 billion) each day. The Sensex took nearly 30 years to reach the 36,000 mark in 2018 and in a little more than two years, it gained nearly 40 per cent.

The broader index Nifty gained 78 points or 0.54 per cent to close at 14,563. India is witnessing a strong up move in the markets ahead of the annual Budget presentation on February 1.

Both the Nifty and Bank Nifty indices have gained over 100 percent in value since March 2020 lows.

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Published on January 12, 2021
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