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A day after the Nifty hit record levels, the BSE Sensex on Wednesday closed above 30,000 mark for the first time, buoyed by the anticipation of strong economic and earnings growth ahead.
The rupee also appreciated to close at 64.11 to the dollar, near a 21-month high.
The Nifty, which crossed the 9300 level on Tuesday, continued to stay above that mark as bulls took charge of the markets.
All the BSE sectoral indices, led by FMCG, metals, bank and IT, traded in the positive zone with gains of up to 0.57 per cent.
Analysts said the surge is due to a combination of relatively strong macroeconomic fundamentals, a lower inflation environment, a major reform measure such as GST — all of which support sustainable growth.
“With a stabilised commodity base, upbeat consumption and most importantly, a favourable low base, the earnings from here on could witness a strong double-digit growth recovery in FY18E and drive the market momentum,” said Pankaj Pandey, Head-Research, ICICI Direct.
Factors such as a structural shift towards digitisation of the economy, coupled with increased focus on channelisation of financial savings, given the relative attractiveness of equity versus other asset classes, would keep the Indian financial market buoyant for the next 3-5 years, analysts said.
FIIs have been net sellers so far in April after more than ₹33,000 crore worth of buying in March, but domestic investors bought more than ₹6,000 crore worth of shares this month.
Key indices have gained 13-14 per cent year-to-date, making it the best-performing market globally so far. While valuations look expensive, growth is yet to pick up, which has had some investors wondering if the markets are in a bubble territory. Market analysts though allay such concerns.
“I can’t say that it is a bubble, as valuation (one year forward) right now is 18-19 times and not 24-25 times as seen historically,” said Gautam Duggad, head of research-institutional equities at Motilal Oswal Financial Services.
The Nifty 50 has gained 14 per cent till date but Nifty Midcap and Small Cap have jumped 26-28 per cent. With hardly any value left in many sectors (large, mid or small), market experts unanimously prefer large-cap stocks over small- and mid-cap stocks.
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