Stocks

As Sensex tops 59,000, India now world’s No 6 stock market by M-cap

Our Bureau Mumbai | Updated on September 16, 2021

Bank stocks climb, ahead of FM press conference; IT, metals lose shine

The slew of reforms announced by the Centre for the telecom sector along with the expected announcement on a bad bank pushed India’s benchmark indices to new highs on Thursday with the Sensex breaching the 59,000 mark and the Nifty topping 17,600.

The Sensex has been on fire over the past two weeks, moving from 57,000 to 58,000 in three days from August 31 to September 3 and crossing the 59,000 mark in eight days.

India is now the world’s sixth biggest stock market, overtaking France for the first time in market capitalisation, with the benchmark Sensex surging more than 23 per cent this year.

Joseph Thomas, Head of Research, Emkay Wealth Management, said: “The Sensex and the Nifty moved up to the highest levels ever during the trading session today, supported by a significant up-move in public sector banks close to 5 per cent and the private sector banks rising by 2 per cent. The PLI for the auto sector, greater clarity on the telecom dues with the moratorium announcement, and the announcement of guarantees for the Bad Bank were the factors that helped the markets rise.”

The BSE Sensex closed at 59,141.16, up 417.96 points or 0.71 per cent. The Nifty recorded a closing high of 17,629.50, up 110.05 points or 0.63 per cent.

FIIs turn buyers

“The main reason for the rally is the reform that is happening, which is improving the sentiment of those investing in India. For example, FIIs are back after a gap of five months,” said Vinod Nair, Head of Research at Geojit Financial Services

After months of remaining sellers, the Foreign Institutional Investors have turned buyers, picking shares worth ₹1621.88 crore on Thursday.

According to Nair, overall, the collapse of the Chinese markets is also impacting emerging markets. “If you look at this time, where there is so much of liquidity, money in the domestic and the international market, they (investors) have to put the money where there more reforms are happening.. and will support growth...”

“The business environment is conducive and the pent up demand is coming back. That’s why the exuberance in the market,” said Kranthi Bathini, Equity Strategist-WealthMills Securities Pvt Ltd.

The dizzying pace of the market rally, however, has also raised concerns of a sharp correction and its consequent impact on the economy. According to Nair, this may be the last phase of this current rally.

 

Breadth remains positive

The breadth of the market remained positive with as many as 1,678 stocks advancing on the BSE, as compared to 1,591 stocks that declined while 156 remained unchanged; 394 stocks hit the upper circuit as compared to the 157 stocks that were locked in the lower circuit; 286 stocks touched a 52-week high and 15 touched a 52-week low.

Auto sector gets ₹26,058-crore PLI scheme to push new tech, clean fuels

S Ranganathan, Head of Research at LKP Securities, said, “It is generally seen that when an underperformer makes a much-awaited up-move, it creates a feel-good effect on others. Ahead of the operationalisation of the NARCL [National Asset Reconstruction Company Ltd], banks provided the much-needed ammunition to bulls to notch up record highs of 59K on the Sensex. The charge of the energised bulls took India’s market capitalisation ahead of France, as PSU [public sector undertaking] banks lent the firepower.”

Bad bank’s Security Receipts to get Govt backing

IndusInd Bank, ITC, State Bank of India, Reliance and IOC were the top gainers on the Nifty 50 while Grasim, Bharti Airtel, TCS, Shree Cement and Tata Steel were the top laggards.

The much-awaited move on ‘bad bank’ — NARCL — inched closer to going live with the Union Cabinet approving a crucial proposal that requires the government to guarantee the security receipts (SR) issued by NARCL when buying non-performing assets (NPAs) from banks, as per previous reports.

Telecom stocks ring louder

Auto and telecom stocks also gained focus after the Cabinet approved support packages for these sectors.

Joseph Thomas, Head of Research, Emkay Wealth Management, said: “The Sensex and the Nifty moved up to the highest levels ever during the trading session today, supported by a significant up-move in the public sector banks, close to 5 per cent, and the private sector banks rising by 2 per cent. The PLI [production-linked incentive] for the auto sector, greater clarity on telecom dues with the moratorium announcement, and the likely announcement of guarantees for the ‘bad bank’, and so on, helped the markets rise higher.”

IT, metals lose momentum

On the sectoral front, while financials, FMCG and oil and gas stocks gained, IT and metals dragged.

Nifty Bank was up 2.22 per cent at closing. Nifty PSU Bank recorded the highest gains, closing 5.43 per cent higher, while Nifty Private Bank was up 2.67 per cent. Nifty Financial Services was up 1.09 per cent. Nifty FMCG was up 1.24 per cent. Nifty Oil & Gas also gained and closed 1.21 per cent higher.

Meanwhile, Nifty IT and Nifty Metal were down 0.62 per cent each.

Broader indices

Broader indices closed in the green. Nifty Midcap 50 was up 0.80 per cent while Nifty Smallcap 50 was up 0.50 per cent.

The S&P BSE Midcap was up 0.48 per cent while the S&P BSE Smallcap was up 0.08 per cent.

The volatility index rose 4.97 per cent to 14.41.

Published on September 16, 2021

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