Sensex hits 49,000-mark for first time2 min read . Updated: 12 Jan 2021, 05:56 AM IST
- The Sensex has raced from 48,000 to 49,000 points in just four days, the third-quickest 1,000-point gain since August
- The rally will continue as investors expect the government to announce some bold reforms in the upcoming Union budget, analysts said
The benchmark BSE Sensex index shot past the 49,000 mark for the first time on Monday, as a result of a brighter earnings outlook, progress on the coronavirus vaccination front, and hopes of a new US stimulus. The index ended the day at 49,269.32, up 486.81 points or 1%, while the Nifty closed at 14,484.75, up 137.50 points or 0.96%.
The Sensex has raced from 48,000 to 49,000 points in just four days, the third-quickest 1,000-point gain since August. It had previously gained 1,000 points intra-day in a single session to hit the 43,000 mark and had taken three sessions to gain 1,000 points to reach 46,000.
A major factor behind the surge in the indices is the decision to start India’s covid-19 vaccinations on 16 January. An estimated 30 million healthcare and frontline workers will get the vaccine first. They would be followed by those above 50 years of age and then those who are less than 50 years old but have co-morbidities, taking the total to 270 million people.
“The anticipation of a better-than-expected earnings season, combined with supportive global cues, aided the upbeat start. Stock-specific volatility would remain high as the earnings season gains pace," said Ajit Mishra, vice-president, research, Religare Broking Ltd.
The revival in earnings growth is expected to continue in December quarter as the recovery from lockdown-led sluggishness gathers steam. The rebound in most firms is likely to be led by cost cuts and cheaper inputs.
The rally will continue as investors expect the government to announce some bold reforms in the upcoming Union budget, analysts said. Though the Indian economy is estimated to contract by a record 7.7% in FY21, the worst in more than four decades, there is a lot of anticipation about revival of macros from FY22 onwards.
“The covid situation in India has stabilized for now. We expect India’s real gross domestic product (GDP) growth to rebound more than 11.5% year-on-year (y-o-y) in FY22. While economic growth in FY22 could be at a multi-decade high, this largely reflects the rebound from deeper contraction in FY21 GDP," said Tanvee Gupta Jain, economist at UBS Securities India Pvt. Ltd.
The economic rebound in FY22 will largely be led by continued improvement in consumption, strong global growth, successful rollout of the covid-19 vaccine, and the government’s focus on growth-supportive reforms, Jain said.
Foreign institutional investors have so far in FY21, pumped in nearly $30 billion in Indian shares, while domestic institutional investors are net sellers of equities worth ₹1,18,371.30 crore.