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Sensex, Nifty close at record highs: 5 factors behind the rally

Sensex, Nifty close at record highs: 5 factors behind the rally

Sensex rallied 958 points to 59,885 and Nifty rose 272 points to an all-time high of 17,822

The market capitalisation of BSE-listed firms reached a record high of Rs 261.74 lakh crore. The market capitalisation of BSE-listed firms reached a record high of Rs 261.74 lakh crore.

Sensex and Nifty ended at their lifetime highs today, aided by across-the-board rally amid positive global cues. Sensex rallied 958 points to 59,885 and Nifty rose 272 points to an all-time high of 17,822.

During the day, Sensex touched an all-time high of 59,957 and Nifty reached an all-time peak of 17,843. The market capitalisation of BSE-listed firms reached a record high of Rs 261.74 lakh crore.

Sensex has gained 58.98% or 22,216 points and Nifty has zoomed 60.11% or 6,691 points in one year.

On the other hand, Sensex has climbed 25.41% or 12,134 points and Nifty has risen 3,841 points or 27.47% since the beginning of this year.

The surge in benchmark indices reflects a number of factors, which have prompted investors to pump their money into the equity market.

Here's a look at five of them that pushed Sensex and Nifty to record highs today.

Global markets in green:  World shares rose on Thursday after the Federal Reserve signalled it may begin easing its extraordinary support measures for the US economy later this year. Germany's DAX climbed 0.8% to 15,635.96 and the CAC 40 in Paris advanced 0.7% to 6,683.52. Britain's FTSE 100 was 0.4% higher, at 7,113.83.

The futures for the Dow Industrials and the S&P 500 rose 0.6%. Global markets were also buoyant after Evergrande, one of China's biggest private real estate developers, said it will make a payment due Thursday on a domestic bond.

Strong foreign fund inflows: Foreign institutional investors (FIIs) have turned bullish for the Indian equity market in September. They have turned net buyers of Indian equities after remaining sellers in the last five months.

FIIs have made net purchases worth Rs 6,337 crore in the cash segment of capital market till September 22. Earlier, FIIs sold equities worth Rs 43,842 crore in the cash segment from April to August this year.

Banking, capital goods shares gain: The huge rally in the market today was led by banking, capital goods and consumer durables shares. BSE bankex ended 956 points higher at 43,271 and Bank Nifty closed 827 points higher at 37,771.

Other sectoral gainers were capital goods (552 points), consumer durables (652 points), metals (337 points), IT (339 points) and realty (315 points) indices on BSE. All 19 BSE sectoral indices except FMCG, ended in the green.

Strong technicals: Analysts are optimistic about further uptick in the Indian equity indices.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd said, "In the short term, Nifty has formed a strong bullish breakout candle and has consistently maintained higher bottom series formation, which supports further uptrend from current levels. For day traders, 17,800-17,750-17,720 would be key support levels. On the other hand, 17,900-17,950-17,990 could act as a major resistance level in the short run. Contra traders can take a long bet between 17750-17720 with a strict 16910 support stop loss."

Mohit Nigam, Head - PMS at Hem Securities said, "On the technical front, market is witnessing a continuous positive trend and it has sustained well above 17,700-17,750 levels. We believe this up move will extend till 18,000 level in the short term. On the downside, 17,600 is the immediate support in Nifty 50 followed by 17,400."

Optimism over economic recovery:  Positive growth forecasts from various quarters for the Covid-19-hit Indian economy have turned sentiments bullish in the equity market.

Asian Development Bank expects India's gross domestic product (GDP) to grow 10% in fiscal year 2021-22, led by a rise in domestic demand and exports. The forecast covers disruptions in economic activity caused by the second COVID-19 wave, which hit services, domestic consumption, and the urban informal sector, according to the update from the Asian Development Outlook.

ADB's growth forecast is slightly higher than the Reserve Bank of India, which pegged the economic growth at a healthy 9.5% in the current fiscal year.

In Q1 of this fiscal, India's economic growth rose to a record high of 20.1%. This was the fastest quarterly growth for Indian economy since such data began to be released in mid-1990s.