Equities continued to register a strong rally for the second consecutive day on Tuesday with the benchmarks gaining more than 1% each to close at near six-month high levels. Strong global cues and a steady flow from foreign investors boosted sentiments at a time when investor confidence is already high on expectations of political stability as the general elections near.
The 30-share Sensex gained 481.56 point,s or 1.30%, to close at 37,535.66. The Sensex pack saw 20 constituents gaining ground with the gainers led by financial and energy stocks. The broader Nifty ended the day above the 11,300-mark at 11,301.20, gaining 133.15 points or 1.19%.
This is the highest close for the benchmarks since September 17, 2018.
Meanwhile, the rupee gained 18 paise on Tuesday to close at a more than two-month high of 69.71 against the dollar with the gains primarily fuelled by foreign inflows and a weaker dollar in the overseas markets.
The rally, though broad-based, saw some of the sectoral and broader indices fall from intraday highs as the trading session progressed. During the morning session, about 530 stocks were trading in the red, the number of which rose to 1,071 as the session came to an end though the overall market breadth was still positive with over 1,650 gainers.
Incidentally, the broader indices like BSE Midcap and BSE Smallcap gained 0.65% and 1.07%, respectively. The broader indices have been on an upswing in the recent past as market analysts bet on the attractive valuation of most of the side counters.
“Valuations in the mid and small cap space had been beaten down significantly over the past one year and at the peak of the India Pakistan tensions they were trading at around10% discount to large caps which was last seen in 2013,” said Jyoti Roy of Angel Broking.
Reasonable valuations
“We believe that prospects of a weak government at the Centre have receded significantly over the past few weeks, which are being factored in by the markets. Mid and small cap stocks are now available at very reasonable valuations and we expect them to lead the pre-election rally,” said Jyoti Roy of Angel Broking.
Meanwhile, the gains in Sensex were led by stocks such as Bharti Airtel, Indusind Bank, ICICI Bank, HDFC Bank, Reliance Industries, HDFC and Kotak Mahindra Bank.
“Banking sector has been a forerunner in the market rally since 2014 given the trend of financialisation leading to a structural growth story for the sector,” said Lalitabh Shrivastawa, AVP-research, Sharekhan.
“We believe that not only is there a big opportunity in the retail banking space, but also, with the peaking out of NPA pressures, some of the corporate banks too are likely to see improved performance,” he added.
The BSE Bankex was among the best performers of the day gaining, 1.70% or 531.99 points.
The recent past has also seen foreign investors betting big on Indian equities with the current month net purchases pegged at about ₹10,200 crore.
