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Nifty scales 16K mark for first time, Sensex hits record high: Key factors that fuelled the rally

Nifty scales 16K mark for first time, Sensex hits record high: Key factors that fuelled the rally

The 50-stock index zoomed 163 points to a record high of 16,048, signaling the underlying bullish sentiment despite rising coronavirus cases and fears of high inflation

Sensex, too, rallied to a record high of 53,402, rising 452 points against previous close of 52,950. Sensex, too, rallied to a record high of 53,402, rising 452 points against previous close of 52,950.

Nifty scaled the key 16,000 mark today as across the board buying despite subdues global cues lifted market sentiment. The 50-stock index zoomed 163 points to a record high of 16,048, signaling the underlying bullish sentiment despite rising coronavirus cases and fears of high inflation.  

Sensex, too, rallied to a record of 53,557, rising 607 points against previous close of 52,950. The market rally was boosted by a surge in BSE midcap and small cap indices, which logged their all-time highs in today's session.

BSE mid cap and small cap indices logged fresh highs of 23,442 and 27,232, respectively.

Top Sensex gainers were Titan Sun Pharma, HDFC, Bharti Airtel and IndusInd Bank rising up to 3.96%.

Of 30 Sensex shares, 27 were trading in the green. Market cap of BSE-listed firms rose to a record high of Rs 239.18 lakh crore.

Market breadth was positive with 1,765 shares rising against 1,358 stocks falling on BSE. 122 shares were unchanged.

Here's a look at factors which have taken the indices to record highs in trade today.

Heavy buying in consumer durables, IT stocks:  BSE consumer durables index rose 482 points to 37,344 logging maximum gains on a sectoral basis. BSE IT index too climbed 281 points to 31,478.

Pharma sector shares also saw heavy buying with BSE pharma index rising 262 points to 26,553.

Rahul Sharma, Co- Founder at Equity99 said, "Nifty Pharma is also supporting the current bullishness as big pharma counters such as Sun Pharma and Lupin both were trading very strong today. From 15,000 to 16,000 levels, Nifty metel index has been a top contributor followed by IT. Now, 16,050 will be next hurdle. If we get closing above 16k mark, 16,100-16,150-16,200 will act as a resistance to the index."

Recovery in macroeconomic numbers: Monthly revenue from Goods and Service Tax (GST) has reclaimed the Rs 1 lakh crore mark with collections rising to Rs 1,16,393 crore in July, up 33 per cent from Rs 87,422 crore in the corresponding month last year. Sequentially, GST revenue is up 25 per cent over Rs 92,894 crore collected in the month of June.  

Another measure of signaling recovery in the economy took the market higher today. India's core sector growth rose 8.9 per cent in June 2021 compared to the June 2020 index. The production of coal, natural gas, refinery products, fertilisers, steel, cement and electricity industries increased in June 2021 over the corresponding period last year.

The final growth rate of index of eight core industries for March 2021 has also been revised to 12.6 per cent from its provisional level of 6.8 per cent which led to improved sentiment in the market.

Merchandise exports rose 47.9 percent in July compared to July 2020. Exports also climbed 34.06 percent compared to July 2019, before the pandemic struck.

"Now, the macros are turning very positive with the declining fiscal deficit, rising tax collections, and now the excellent performance in exports, which have shot by 48 percent in July. The PMI at 55.3 indicates a potential sharp turnaround in economic activity," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Earnings effect

Earnings of Indian companies have largely met market expectations, boosting market sentiment. The improvement in earnings comes despite imposition of strict lockdown to contain Covid-19 cases in the first quarter of this fiscal.

"The Q1FY22 earnings season has been in-line, benefitting from the lower base of Q1FY21, as lockdowns in Q1FY22 were localised and less stringent against that of Q1FY21. Nifty profits for the 31 companies that have posted their results have grown 70 percent year-on-year (YoY) against the expected 64 percent YoY growth," said brokerage firm Motilal Oswal Financial Services.

Gaurav Garg, Head of Research, CapitalVia Global Research said,"Technical indicators also support positivity in the market. Higher earnings being posted by companies is another factor adding to the positive sentiments in the market."