The Sensex gained 0.98%, or 701.63 points, to close at 72,038.43 after touching an all-time high of 72,119.85. The Nifty advanced 1%, or 213.40 points, to close at 21,654.75, off the record high of 21,675.75. The Nifty Bank index rose 1.2% to a record closing level of 48,282.20.
Analysts expect the renewed bullish momentum to push the Nifty higher over the next two weeks led by banks. “In the next couple of weeks, the Nifty is likely to extend its gains to 22,000 levels while the Bank Nifty has a target of 48,800,” said Rajesh Palviya, senior VP-research, technical and derivatives, Axis Securities. “Nifty retraced 100% to its recent correction, indicating the possibility of a bullish run.” The market run-up on Wednesday catapulted India’s total market capitalisation to $4.3 trillion, or ₹361 lakh crore.
US, Europe Markets
“The new highs can be attributed to the overall momentum globally since the US, Asia, and other markets are also close to all-time highs,” said Narendra Solanki, head of fundamental research, investment services, Anand Rathi Brokerage.
US markets gained 0.4-0.5% on Tuesday, inching closer to their all-time highs. On Wednesday, the S&P 500 came within touching distance of its record close, before erasing gains. At the time of going to press, the benchmark index was down 0.02%, the Dow Jones Industrial Average was up 0.12% and the Nasdaq Composite was down 0.05%.
In Asia on Wednesday, Hong Kong advanced 1.74%, South Korea ended 0.42% higher, Indonesia gained 0.12%, Taiwan ended 0.79% up and China closed 0.54% higher. The pan-Europe index Stoxx 600 was up 0.2%.
At home, foreign portfolio investors bought shares worth a net Rs 2,926 crore, while domestic institutions were sellers to the tune of Rs 192 crore on Wednesday. In December so far (until December 26), overseas investors have pumped Rs 57,275 crore into India stocks bolstered by the US Federal Reserve’s signal that it plans to cut interest rates three times in 2024 and the BJP’s victories in the recent state elections. A section of Wall Street is betting on US monetary policy easing as early as March. The Sensex and Nifty have advanced close to 8.9% in the past month.
Money managers said the pace of the recent run-up warrants caution.
“We believe one needs to be cautious as the valuation is running ahead of fundamentals,” said Jitendra Gohil, chief investment strategist, Kotak Alternate Asset Managers Ltd.
The Nifty is expected to sustain a one-year forward price to earnings (PE) ratio of 19-20 times, which translates to more moderate high single-digit equity returns in 2024, he said.
Gohil is more bullish on large caps at this juncture.
“Large caps could offer better risk-reward over the next few months,” he said. “As anticipated, they’ve outperformed mid-caps in the past one month and reducing allocation to mid and small caps is recommended.”
