Banking, auto stocks lead Sensex to near 50k milestone

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January 13, 2021 4:15 AM

Ambareesh Baliga, an independent market expert, said, “The Nifty Bank may be rising, but caution needs to be taken as the RBI has stated that NPAs could rise in September which could hurt the banking stocks.”

According to market experts, for the current calendar year 2021 as well, the midcap stocks are set to outperform the large cap indices.Tata Motors, TCS, Adani Enterprises, Adani Ports, L&T, Gail among others were seen hitting fresh 52-week highs.

Indian markets rallied on Tuesday, with the benchmark Sensex just kissing distance away from the 50,000 mark. The 30-share Sensex rallied by 247.79 points (0.50%) to close at 49,517.11 whereas, the Nifty rallied by 78.7 points (0.54%) to close at 14,563.45. Despite the Reserve Bank of India’s financial stability report warning about rising bad loans, the Nifty Bank soared to touch a 52-week high.

Indian markets’ upward move was led by banking and automobile stocks. The Nifty Bank index rallied by 1.06% on Tuesday to close at 32,339.00. The index intraday touched 32,397.95, which is a 52-week high for the index. A day before, the Reserve Bank of India’s financial stability report warned that the non-performing asset ratio is expected to rise to 13.5% by the end of September from 7.5% a year ago.

Ambareesh Baliga, an independent market expert, said, “The Nifty Bank may be rising, but caution needs to be taken as the RBI has stated that NPAs could rise in September which could hurt the banking stocks.”

The broader market, which saw profit taking in the previous trading session too, rallied on Tuesday. The Nifty Midcap 100 and Nifty Smallcap 100 rallied by 0.67% and 0.09% respectively. Just early in January, the Nifty Midcap index had touched its record high after three years of underperformance to the benchmark indices.

This has been mainly on the back of increased liquidity in the stock market, the start of a new economic recovery cycle and the rush of new retail investors in the market. According to market experts, for the current calendar year 2021 as well, the midcap stocks are set to outperform the large cap indices.

Harshad Patwardhan, CIO-Equities, Edelweiss Asset Management, in his report said that there are high odds of midcaps outperforming over three to five year investment horizon. “On a three year daily rolling return basis, 65% of times the midcap index has outperformed large cap index. On a five year daily rolling return basis, 77% of times the midcap index has outperformed large cap index,” said Patwardhan.

The only risks posed to the current midcap rally are global risk off events, global central banks reversing benign monetary policy due to inflation, Indian government going back on key reforms among others.

Foreign portfolio investors (FPIs) on Tuesday bought stocks worth $76.19 million whereas domestic institutional investors sold stocks worth $177.9 million. The biggest gainers on the Nifty were Tata Motors, GAIL, Bharti Airtel, State Bank of India and Coal India up by 7.52%, 4.68%, 3.95%, 3.79%, and 3.6%. The biggest losers on the Nifty were Asian Paints, Titan, Nestle India, Hindustan Unilever, and Sun Pharmaceuticals down by 3.24%, 2.17%, 2.13%, 1.98% and 1.78%.

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