Sensex, Nifty50 Likely to Continue Record-Breaking Rally

  • Stock Market News
Sensex, Nifty50 Likely to Continue Record-Breaking Rally
Credit: © Reuters.

By Malvika Gurung -- High-paced vaccination drive, reviving economies across the world, easing inflation, and RBI’s dovish stance, among others, are major contributors of the Indian stock indices, BSE Sensex 30 and Nifty 50 closing at record highs for six consecutive sessions.

The stock market closed at record highs on Thursday last week, with Sensex crossing the 61,000-mark (at 61305.95) and Nifty 50 surpassing the 18,000-mark (at 18,338.55).

With increasing investor optimism, consequent to positive corporate earnings results, rising purchases of under-owned stocks by bullish investors, and improving market sentiment, the Indian equity indices have high chances of moving with their paced-up momentum even today when the market opens up for a new week.

Despite hawkish factors like increasing crude oil prices and a weakening Indian rupee against the greenback, the Indian stock market has continued to maintain its record-breaking rally throughout the past week.

Major sectors which did not perform up to the mark over the past few months, like bank and auto, were among the top gainers as the market closed on Thursday. 

Auto stocks rallied, given the growing expectations of increasing demand for car purchases in the festive season.

The chief investment officer of Quest Investment Advisors, Aniruddha Sarkar stated, “There is a lot of under-ownership in the market from HNIs and retail investors and we are seeing more and more of domestic money coming to the market every month.”

Also, Nifty’s PE ratio (Price to Earnings) has risen by 46% at 22.8 times, compared to its 16-year average. Furthermore, the Volatility Index (VIX) has fallen to 15.77, a 2% decline.

As these figures indicate bullish behavior in the equity market, money managers advise caution. Sarkar advises, “In the short run, investors should be careful as 5-10% corrections can happen at index level and overheated stocks can fall even more.”

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