Indian equities were trading with strong gains in the afternoon of January 8, with benchmarks the Sensex jumping over 500 points and Nifty surpassing 14,300 mark.
Market benchmarks Sensex and Nifty hit their fresh record highs of 48,629.12 and 14,302.10, respectively.
The rally in the market was broad-based as midcap and smallcap indices rose in sync with the benchmarks, both clocking gains of over a percent each.
The BSE Midcap hit a fresh high of 19,161.20, while the smallcap index hit an intraday high of 18,984.69. The smallcap index is about 1,200 points below its all-time high of 20,183.45, which it hit on January 15, 2018.
More than 450 stocks, including Mahindra & Mahindra, Sun Pharma, Tech Mahindra and UltraTech Cement, hit their 52-week highs on BSE.
At 1435 hours, the Sensex was 532 points, or 1.11 percent, up at 48,625.60 and the Nifty was 159 points, or 1.13 percent, up at 14,296.55.
Here are 5 factors that are pushing the market higher:
Positive global cues
Most Asian peers traded near record-highs which influenced the sentiment back home. As per Reuters, Asian shares vaulted to record highs on January 8 and Japan’s Nikkei hit a three-decade peak as investors looked beyond rising coronavirus cases and political unrest in the United States to focus on hopes for an economic recovery later in the year.Optimism around Q3 earnings
IT heavyweight TCS will release its Q3 FY21 scorecard later in the day. As positives like the COVID-19 vaccine and an economic recovery have already been factored in, quarterly earnings, along with the global cues, are expected to dictate the mood of the market in the weeks to come.
“We believe Q3 earnings and global cues would provide further direction to the markets. To start with, the Q3FY21 result of IT major TCS would be on participants’ radar,” said Ajit Mishra, VP-Research, Religare Broking.
Analysts and brokerages expect December quarter numbers to be healthy.
Economic recovery in the sight
In 2021-22, the Indian economy may grow at 8-11.5 percent at constant prices and 11.5 percent with current prices, say economists.
D K Srivastava, chief policy advisor, EY India, estimates Gross Domestic Product (GDP) growth at constant prices at 8 percent in 2021- 22, a Business Standard report said.
Nominal GDP is projected to grow 11.5 percent in FY22, according to Srivastava.
Biden’s presidency positive for markets
With the US Congress affirming Joe Biden’s electoral college victory over President Donald Trump, it ends the uncertainty surrounding the elections as well as the equity markets. The Democrats Senate win will allow Biden to push through policies such as more fiscal spending and higher taxes.
“With the Georgia election outcome, the uncertainty in the US seems to be coming to an end and the market always prefers certainly, negative though it might be. Of course, here the outcome doesn’t seem negative,” Kunj Bansal, CIO, Karvy Capital, told Moneycontrol.
Developments in the US are likely to continue to add to the positivity created by loose monetary and fiscal policies. Loose monetary policies adopted by the central bankers led to more than Rs 1 lakh crore of flows into Indian markets in 2020.
Experts say when the liquidity is in abundance, the market will ignore negative news and focus on more stimulus measures to support the economy.
Rally in IT, auto stocks
Auto and IT heavyweights such as Infosys, TCS, Tech Mahindra, Maruti and Mahindra & Mahindra are among the top contributors to the rally in the market.
IT stocks have jumped ahead of the December quarter numbers of TCS, while auto numbers have been bullish, as analysts believe the sector is poised for growth with the economy recovering.
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