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MUMBAI: Indian equities hit record highs in early deals on Thursday amid widespread optimism among investors, as US President Joe Biden formally took over the Oval Office at the White House in Washington, DC.

The benchmark Sensex scaled the 50,000-mark for the first time ever, following the rise in global peers. The Sensex had opened at 50,096.57, up 304.45 points or 0.6%. The Nifty was at 14,712.90, up 68.20 points or 0.47%.

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Asian markets advanced on Thursday after US stocks closed at record highs on hopes Biden will provide more economic stimulus to offset damage wreaked by the covid-19 pandemic.

“We are at a cusp of a new economy cycle and business uptrend in India. The pillars of the long term equity rally are in place, low interest rates, bank balance sheets on a mend, significant policy reforms along with the recent focus on attracting foreign investments and developing the Indian manufacturing sector," Gaurav Dua, head capital market strategy and investments, Sharekhan by BNP Paribas, said.

Democrat Biden was sworn in as the 46th president of the United States on Wednesday, in a ceremony at the heavily protected US Capitol, ending the tumultuous four-year presidency of his Republican predecessor Donald Trump. The Biden administration is expected to push through a nearly $2 trillion fiscal stimulus plan.

Biden is expected to sign 15 executive actions after being sworn in as the US president, aides said, undoing policies put in place Trump, and making his first moves on the pandemic and climate change.

Foreign liquidity, which has been driving Indian markets to record highs after the crash in March, is expected to grow as the new US government is expected to bolster the case for heavy fiscal stimulus. In 2021 so far, foreign institutional investors (FIIs) have invested $2.56 billion in Indian shares while domestic institutional investors (DIIs) have sold equities worth Rs12,565.10 crore. Last year, FIIs invested $23.37 billion in Indian shares while DIIs dumped shares worth 34,966.38 crore.

“The Union Budget is the next major event that traders would be focusing positioning towards. In that context, PSU banks and capital goods sectors have attracted fund flows, in anticipation of announcements for these sectors. IT sector results beat expectations but existing long positioning acted as an overhang," Hariharan, head-sales trading, Emkay Global Financial Services, said.

However, abundant liquidity in Indian markets is not supported by fundamentals and high valuations, analysts have warned. Earnings will have to be exceptionally strong in the coming year to sustain the steep multiples.

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