The Nifty crossed the 11,300 mark and is now just 978 points short of its all-time highs that it witnessed in January.
Indian equities continued their upward journey on Tuesday with the benchmark Sensex rising by 224.93 points or 0.59% to close at 38,407.01. The broader Nifty gained 52.35 points or 0.46% to close at 11,322.5 during the day’s trading session. The stock markets rose for the fourth straight session, aided by strong global cues as investors bought risk assets over optimism around the fiscal stimulus package announced in the United States of America and the registration of a Covid-19 vaccine in Russia.
The Nifty crossed the 11,300 mark and is now just 978 points short of its all-time highs that it witnessed in January. The stock markets which had a gap up opening on Tuesday witnessed selling throughout the trading session. Rusmik Oza, executive vice president – head of fundamental research, Kotak Securities, said, “As of now it looks unlikely that the Nifty would breach its all time highs since that would mean the Nifty 50 would trade at a one year forward PE of 24 times to 25 times which is very high. Additionally, the better than expected results seen in Q1 may be unsustainable given that companies managed to cut costs sharply under lockdown, which may not be the case going forward. When Nifty50 was at 8000, the current levels above 11,000 looked like the best case scenario for this year.”
Brokerages such as ICICI Securities, however, expect the stock markets to remain expensive in the near term. In its report, ICICI Securities said, “In our view, evidence of a slow but surely improving global economic environment, earnings beat in Q1FY21 so far and continued commitment by central banks for further QE while maintaining record low interest rates – has the potential to keep markets expensive in the near term.”
Global cues remained strong on Tuesday with Asian markets extending gains from the Wall Street’s overnight rally. The markets saw a synchronised rally globally on the expectation of US fiscal stimulus package and registration of the first Covid-19 vaccine in Russia. Stock markets in South Korea, Japan and Hong Kong rallied between 1.35% to 2.1% respectively. China’s Shanghai Composite was down by 1.15% on the anticipation of rise in the Sino-US tensions. European markets were trading higher at the time of going to press with bourses in the United Kingdom, France and Germany rallying between 2.37% to 2.66%. Dow Jones which gained as much as 1.3% on Monday saw its futures trade in the green ahead of Tuesday’s trading session. They were up by 293 points.
Foreign portfolio investors (FPIs) also have been investing in risky assets such as Indian equities. So far in August, Indian equities have received inflows worth $1.3 billion in total from FPIs. According to Monday’s provisional data, FPIs bought stocks worth $39.7 million whereas domestic institutional investors sold stocks worth $66.43 million. The futures and options segment witnessed a turnover worth Rs 13.68 lakh crore and cash market volumes were at `58,187 crore. This is against the six month average of Rs 14.9 lakh crore and Rs 51,803 crore respectively.
The biggest gainers on Nifty were Zee Entertainment, JSW Steel, Axis Bank, BPCL, and IndusInd Bank, up by 5.16%, 3.94%, 3.92%, 3.58%, and 2.5% respectively. The biggest losers were Shree Cement, Titan Company, UPL, Cipla, and Dr Reddy’s Laboratories, down by 3.87%, 3.57%, 2.33%, 2.09%, and 1.96% respectively.