Indian equities continue to surge for the second straight session on Tuesday, with the Sensex crossing the 69,000 mark for the first time, buoyed by hopes of continuity of the existing government at the Centre after the Lok Sabha elections next year.
The Bombay Stock Exchange’s Sensex opened at a record high of 69,168.53. The index gained 303.41 points, or 0.44 per cent, compared to the previous close of 68,865.12. The National Stock Exchange’s Nifty climbed 122.1 points, or 0.59 per cent, to open at a new high of 20,808.9.
On Monday, the Sensex and Nifty recorded the biggest single-day rally in over a year.
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Heavy buying by investors since Monday is due to the strong showing by the BJP in the state election results, in which it won in three of the five states. The BJP’s victory has raised the market’s expectation of political stability after the 2024 Lok Sabha elections.
“The super Monday, which delivered a 418-point rally in the Nifty, is unlikely to be repeated with the same ferocity in the coming days. But the market construct stays bullish,” said V K Vijayakumar, chief investment strategist at Geojit Financial Services.
He said the market has the potential to go up by another 5 per cent in the next few weeks. Beyond that, valuations will get stretched, inviting correction in the market, he added.
“With the outcome overwhelmingly in favor of the incumbent BJP, the confidence of the market in the current dispensation and political continuity post 2024 Lok Sabha elections will get a boost. This augurs well for macro and policy momentum for India, which, at the moment, is seeing the highest growth among major economies (both GDP as well as corporate earnings),” Motilal Oswal Financial Services Ltd said in a report.
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Better-than-expected gross domestic product (GDP) growth of 7.6 per cent in the July-September quarter, higher inflows from foreign institutional investors and hopes of an early rate cut by the US Federal Reserve has already boosted the investor’s sentiments.
The massive institutional buying of above Rs 7,000 crore on Monday reflects institutional confidence in the Indian market, Vijayakumar said, adding that foreign portfolio investments (FPIs) have reversed their selling strategy and have been consistent buyers during the last seven days.
On Monday, while the FPI’s net bought Rs 2,073.21 crore of local shares on a net basis, domestic institutional investors (DIIs) purchased stocks worth Rs 4,797.15 crore, the BSE’s data showed.
So far in December, FPIs have bought Rs 15,462 crore of equities compared to Rs 9,001 purchased in November.
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Among the NSE firms, Adani Enterprises, Adani Ports and Special Economic Zone, BPCL, Axis Bank and Mahindra & Mahindra Ltd gained the most in the morning trades.