The Indian equity market on Friday started Samvat 2067, the first day of the Hindu calendar, on a buoyant note, closing above the psychological 21,000 mark for the first time ever.
The mood was visibly upbeat among the trading community present at the Bombay Stock Exchange (BSE) for the special one-hour Muhurat trading session. ?It was one of the best Muhurat trading sessions we have ever had. The optimism continues because of strong liquidity, good monsoons and strong corporate earnings growth,? said Raamdeo Agrawal , Joint MD, Motilal Oswal Financial Services. Supportive cues from the Asian, European and US future markets also gave a further fillip to Indian equities.
Gaining for the third consecutive day, the benchmark BSE Sensex advanced 111.39 points, or 0.53% to close at 21,004.96. Meanwhile, the broad-based NSE Nifty gained 30.65 points, or 0.49% to 6,312.45, its highest closing ever. The Sensex is now about 200 points short of its all-time intra-day peak of 21,206.77, scaled on January 10, 2008. After gaining 40% on debut, Coal India, the world?s largest producer of coal, also advanced another 2% on Friday to close at Rs 350.
?Some part of the $600 billion stimulus from Fed will have directional effect. Flowing of higher liquidity is good for countries like India. However, there is also a risk of commodity prices flaring. If crude spikes it will be a negative for emerging, markets particularly for India,? Nandan Chakraborty, managing director- institutional equity research, Enam Securities. Oil prices on Friday touched $87 per barrel, highest in over two years. Meanwhile gold and silver prices also scaled fresh highs back home.
?India remains an attractive deflation hedge trade for global asset allocators and pension funds,? Abhay Laijawala and Abhishek Saraf, analysts at Deutsche Bank, said in a report. ?Valuations haven?t reached the bubble zone.?
This year the Sensex index has gained more than 20%, making it the best performing market among the world?s 10 biggest stock markets.
The current rally has been fuelled by abundance of liquidity across the globe. Foreign investors have bought over $27 billion worth of equities so far in 2010, the most in any year in the Indian capital market history. The shortened trading session witnessed a turnover of Rs 6,132 crore in the cash market on both the exchanges, less than a fourth during normal sessions. The market breadth was particularly strong on Friday with four stocks advancing for every decline. All sectoral indices closed with gains.