Equities touch new high over global rally, liquidity push

Bharti, Yes Bank among top gainers

A global rally in equities amidst renewed optimism over U.S.-China trade truce and strong flows from foreign investors in the Indian markets pushed the Indian benchmarks to new record highs on Tuesday.

The 30-share Sensex surged over 1%, or 413.45 points, to close at 41,352.17 as heavyweights from the financials, technology and metal segments registered strong gains. The gainers pack in the Sensex included Tata Steel, Bharti Airtel, Vedanta, Tata Motors, HDFC, Bajaj Finance, Infosys, TCS, Yes Bank and HDFC Bank, among others.

The overall market breadth was also positive with more than 1,400 stocks in the green as against 1,077 declines.

The broader Nifty settled the day at 12,165, up 111.05 points, or 0.92%.

Market participants believe that while the government decision in terms of tax cuts and divestments have acted as positive triggers, global factors and liquidity have largely been the real reason for the surge amid fears of growth slowdown.

Incidentally, India’s growth slowed down to a 26-quarter low of 4.5% in the second quarter of the current fiscal. “The recent surge in Indian equities was triggered by the bold policy decision to cut corporate tax rates and aggressively pursue privatisation. However, the global equity rally also significantly added to improvement in sentiments and the market rally has been driven by a strong revival in foreign portfolio inflows into the country,” Sharekhan said in its latest market outlook report.

As per provisional numbers, FPIs were net buyers at nearly ₹1,250 crore on Tuesday, while the cumulative flows in the current calendar year is well over ₹93,000 crore. Further, leading Asian markets like Hong Kong, South Korea, Taiwan, Indonesia, China and Malaysia all gained ground on Tuesday.

“The equity markets seem to be factoring in an improvement in macroeconomic conditions domestically. They are not assuming a big-bang recovery, but hoping the worst is over,” as per Sharekhan.

Going ahead, experts believe that the market would look for triggers in terms of the ground work that is done ahead of the Union Budget, which will be presented on February 1, and also global factors like trade talks, currency and crude movement.

“Going ahead, market would watch out for FM’s pre-budget meetings with various industries which began yesterday and the GST Council meeting which is scheduled on Wednesday,” said Siddhartha Khemka, head, Retail Research, Motilal Oswal Financial Services.

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Printable version | Feb 20, 2020 12:55:50 PM |

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