By Siddhant Mishra
Indian equities soared to new highs on Wednesday, with the 50-stock Nifty closing at a new lifetime high of 18,562.75 and the Sensex scaling a new peak to close at 62,504.80. Falling crude oil prices, easing inflation and chunky purchases by foreign portfolio investors (FPI) buoyed the sentiment. FPIs have turned buyers of Indian shares, and have bought stocks worth approximately $3 billion so far in November.
With Monday’s rise, the Sensex has gained 5.6% this year, compared with a 6.6% jump in the Jakarta Stock Exchange Composite Index. Led by index heavyweight Reliance Industries, which gained 3.48%, the Sensex rose 211.16 points, or 0.34%, to end at 62,504.80. The Nifty gained 50 points, or 0.27%, to close at 18,562.75.
At 1330 GMT, Brent crude was ruling at at $80.96 a barrel, a fall of $2.67, or 3.1%, having dived more than 3% to $80.61 earlier in the session, for its lowest since January 4. Oil has fallen nearly 15% so far this month amid rising Covid cases in China and fears of further economic disruption.
Strategists at Morgan Stanley wrote on Monday the Sensex could hit 68,500 in December, as a base case, implying an upside potential of 10%. At that level, the gauge would trade at a trailing P/E multiple of 25x, ahead of the 25-year average of 20x.
On Monday, FIIs were net buyers at ₹935.88 crore, while DIIs also turned net buyers to the tune of ₹88 crore, according to exchange data.
Strategists at DSP MF noted that factors such as moderation in interest rate hikes by central banks, easing of supply-chain costs, squeezing of systemic liquidity, fall in natural gas prices and a possible return of FIIs buying may ease the volatile equity markets.
“The equity market seems poised to move up in line with its long-term secular trend, as FIIs seem less bearish on Indian equities. Valuations, as evidenced by the price/earnings ratio, have become more attractive and Indian investors continue regular investments in equity mutual funds via SIPs,” said Sahil Kapoor, market strategist and head of products at DSP MF.
In the first 10 months of 2022, while the Nifty itself rose less than 5%, the Nifty Bank rose almost 17.5%. Banking stocks gained the most among the Sensex pack on Monday, with IndusInd Bank rising 0.83%, ICICI Bank moving up 0.72% and Axis Bank, SBI and Kotak Bank posting gains. A total of 2,058 stocks advanced on the BSE, while 1,555 declined. At the Nifty, 26 stocks advanced, while 24 stocks declined.
BPCL stood out among Nifty stocks, gaining 5.04%. Metal stocks showed a declining trend, with Hindalco losing the most at 2.14%, and JSW Steel and Tata Steel shedding 1.39% and 1.22%, respectively.