Benchmark indices hit fresh highs on Wednesday on the back of improved earnings by index heavyweights, hopes of further policy actions and a good festive season amid strong global indices.
Amid heavy buying pressure in realty, media and private banking indices, Sensex closed at 40,469.78 level, rising 221 points against the last close and Nifty ended the day's trade at 11,961, up 43 points on Wednesday.
While Sensex breached earlier record high level to hit a fresh all-time high of 40,606.91 mark on Wednesday, Nifty made an intraday high to 12,002.90 level, trading 0.80% or 100 points away from the 52-week high of 12,103.05. As per Prabhudas Lilladher's technical analysis, only a breach above 12,000 mark on the broader index Nifty50 could bring further fresh upward movement.
Sectorally, all the indices had a bullish run except for auto, media and private banking indices. While highest growth was recorded in realty sector, rising 2%, over 1% advance was registered in banking and financial services sector.
"After a brief pause, the bulls were back in the business, as the equity benchmark indices ended the day on a positive note largely led by firm global cues," said Ajit Mishra Vice President, Research, Religare Broking Ltd.
Among broader markets, BSE Midcap ended with gains of 0.2% while BSE Smallcap closed lower by 0.4%.
1. Indices surge on reforms hope
As per market analysts, equity market clocked a new high based on a commitment from Finance Minister Nirmala Sitharaman to speed up reforms in the near future. Expectations are that the government is likely to maintain its policy/reform momentum and announce more initiatives in the coming days.
Market sentiment has revived sharply post September 19 and stayed buoyant due to the government and the RBI undertaking several initiatives to arrest growth slowdown. Hopes of further tax reduction, improved global backdrop and good festive season have propelled the broader indices.
2. Realty, banking stocks lead rally
NSE realty index gained the most today among other sectors today, rising 2.3% intraday with 5% gains registered in Indiabulls Real Estate and Sobha Ltd, 3% gain in Godrej Properties and Prestige Industries and 2% advance in Sunteck Realty and DLF shares.
The rally was caused by FM Sitharaman's announcement that the government is working with RBI to revive real estate sector. She flagged concerns over the problems faced by the real estate sector, saying that the ailing sector required a lot of attention. "A healthy real estate sector is the biggest creator of jobs," she added.
"Realty & financials outperformed in expectation of new measures while metal stocks gained owing to easing global trade war," said Vinod Nair, Head of Research, Geojit Financial Services Ltd.
FM's announcement also led banking indices higher. Nifty Bank traded above the 30,540 range on Wednesday and gained crucial support for further bullish momentum. It closed at 30,591 level.
Top gainers on Nifty today included ICICI Bank, HDFC Bank, IndusInd Bank, Kotak and Axis Bank.
3. Global equities rise on hopes of trade war resolution
Recently, global markets have taken a bullish stance in the wake of a rally buoyed by hopes of a trade deal between the United States and China, nearing a truce in their 16-month-long trade war.
Optimism for a trade deal is high as US-China have been showing curiosity and hinting at a 'Phase One' deal anytime this month. United Nations on Tuesday also alerted that the ongoing trade war between the United States and China is harming both economies, with a sharp drop in exports and higher prices for consumers.
MSCI's broadest index of Asia-pacific shares inched higher amid trade deal optimism, coupled with better-than-expected earnings performance. European stocks too rose in their early sessions and traded close to all-time highs.
"Amid the ongoing corporate earnings, market participants should also keep a close watch on the global developments and movement in crude and currency, as it would induce some volatility in the markets," quoted Ajit Mishra Vice President, Research, Religare Broking Ltd.
4. Strong second-quarter earnings
Corporate commentaries in the ongoing Q2FY20 earnings season turned marginally better and in line with street estimates so far.
" Better results from index heavyweights kept expectations high for earnings growth, influencing investors to stay in the market", said Vinod Nair, head of research, Geojit Financial Services.
Additionally, companies are also expecting a recovery in 2HFY20 following a revival in the monsoons, signalling a positive outlook for the forthcoming months.
5. FII inflows
FIIs continued their buying streak and remained net buyers in the first week of November. In October, overseas investors pumped in Rs 16,464.6 crore in the domestic capital markets. Inflows in October nearly doubled when compared to September FII inflows amid positive domestic and global cues.
"In India, astute liquidity management by the RBI along with the recent corporate tax cut and murmurs of further tax rationalisation across various asset classes have made the economic prospects even more attractive, which has resulted in 'overflowing' inflows from FIIs," Wealth Chief Investment Officer Rajesh Cheruvu told PTI.
By Rupa Burman Roy