6 Reasons Why Sensex Rallied 834 Points Today

Tue, 19 Jan Closing

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After staging a gap-up opening, Indian share markets extended gains as the session progressed and rallied nearly 2%, boosted by realty and finance stocks.

Benchmark indices registered sharp gains today after a massive selloff in the past two days as the incoming US administration pushed for a big stimulus.

At the closing bell, the BSE Sensex stood higher by 834 points (up 1.7%). In intraday trade, the Sensex zoomed 936 points to 49,500 levels.

The NSE Nifty closed higher by 240 points (up 1.7%).

Bajaj Finserv and Bajaj Finance were among the top gainers today.

The SGX Nifty was trading at 14,565, up by 277 points, at the time of writing.

The BSE Mid Cap index ended up by 2.3%. The BSE Small Cap index ended higher by 1.7%.

On the sectoral front, gains were largely seen in the finance sector, realty sector and metal sector.

Asian stock markets ended higher today. As of the most recent closing prices, the Hang Seng ended up by 2.7% and the Shanghai Composite ended down 0.8%. The Nikkei rose 1.4%.

US stock futures are trading higher today indicating a positive opening for Wall Street indices. Nasdaq Futures are trading up by 119 points (up 0.9%), while Dow Futures are trading up by 126 points (up 0.4%).

The rupee is trading at 73.16 against the US$.

Gold prices for the latest contract on MCX are trading up by 0.2% at Rs 48,990 per 10 grams.

Here are Top 6 Factors Why Indian Share Markets Rallied Today

Firm Global Cues: Asian stock markets rose today after data showed China's economy was one of the few to grow in the year 2020. China's economy grew 2.3% in 2020 while the United States, Europe and Japan struggled in the wake of the coronavirus pandemic.

Europe backs Money Printing: Eurozone finance ministers pledged continued fiscal support for their economies and discussed the design of post-pandemic recovery plans as the European Commission warned the Covid-19 crisis was making the bloc's economic imbalances worse.

Sustained Capital Inflows: As per data available with NSDL, foreign portfolio investors (FPIs) have pumped in over Rs 130 billion in the Indian share markets in January so far. FPIs invested a net Rs 174.4 billion into equities but pulled out Rs 25.9 billion from the debt segment between January 1-18.

December Quarter Earnings: Company have reported decent December quarter earnings so far.

Budget 2021: Finance Minister Nirmala Sitharaman has said that the Budget will see a massive public sector investment and expenditure push, including on infrastructure projects and the healthcare sector.

Rising Crude Oil Prices: Crude oil prices climbed today as optimism that government stimulus will buoy global economic growth and oil demand trumped concerns that renewed Covid-19 pandemic lockdowns globally could cool fuel consumption.

We will keep you updated on how these factors develop in the coming days and what effect they have on Indian stock markets. Stay tuned!

Speaking of the current stock market scenario, in her latest video, Co-head of Research at Equitymaster, Tanushree Banerjee lays down the steps that could help you reset your portfolio for a profitable 2021.

This is first time in 25 years that a benchmark index in India, the BSE Sensex, is trading at a P/E multiple of 40x. The last time the Sensex breached this multiple in October 1994.

Most investors are worried about parking money in safe stocks or safe asset classes. But are they making the right choices?

Tune in to the video to find out more:

In news from the mutual funds space, investors in the six shut debt schemes of Franklin Templeton Mutual Fund have voted overwhelmingly in favour of shutting them down.

The observer's report has revealed that about 97% of votes in five of the debt schemes - Franklin India Low Duration Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund, and Franklin India Income Opportunities Fund were cast in favour of closing the schemes.

For Dynamic Accrual fund, the figure was 93% in favour.

In six video meetings held last month, the asset manager's top management and trustees had assured investors that if the outcome of the voting was a 'Yes', it would be able to monetise the papers faster, while preserving the value of their investments as market conditions had become a lot more conducive.

The Supreme Court is scheduled to hear the matter again on January 25 to decide on disbursement of cash after delving into objections to the Observer's report.

In April last year, Franklin Templeton decided to wind up six of its debt schemes oriented towards high-yield investments with total assets under management of over Rs 250 billion.

We will keep you updated on the latest developments from this space. Stay tuned.

Moving on to stock specific news...

India Cements was among the top buzzing stocks today.

The promoter of Avenue Supermarts Radhakishan Damani, along with brother Gopikishan S Damani, hiked stake in India Cements during the December 2020 quarter.

Following this development, India Cements share price rose as much as 7%.

Radhakishan Damani increased stake in the firm by 0.54% in the third quarter of FY21. He held 11.34% stake in the company at the end of December quarter against 10.8% stake at the end of September quarter.

At the same time, his brother owned 8.46% of the total paid-up capital in the company in Q3 as against 8.26% in Q2. Besides that, Damani brothers together hold another 1.34% stake in the firm.

Together, Damanis hold 21.14% stake in the firm as against 28.42% held by the promoters.

The Damani family has been steadily increasing their holding in India Cements. At the end of December quarter last year, the ace investor held a 4.73% stake in the cement maker. His brother Gopikishan was not among shareholders with over 1% stake in India Cements.

Last year in June, a report had said that Radhakishan Damani is considering acquiring a controlling stake in India Cements, but the firm had later denied the same.

India Cements is slated to announce its Q3 numbers later this month on January 27, 2021.

Moving on to news from the realty sector, shares of real estate companies witnessed buying interest today with the Nifty Realty index surging nearly 5% after Indiabulls Real Estate said it is seeing high demand for completed products, and continues to expect robust collections for the rest of the financial year.

In an investor presentation, the Mumbai-based real estate developer said the affordability of real estate is at a multi-year high with declining interest rates.

Among individual stocks, DLF hit a 52-week high of Rs 299.45 after rallying 7% in intra-day trade. Shares of Godrej Properties, Prestige Estate Projects, Sobha, Oberoi Realty and Brigade Enterprises ended up in the range of 4-8%.

Over the last six months, residential real estate has witnessed a strong recovery wherein almost all top cities are clocking record sales as compared to previous years. Reports state that customers and investors who had stayed away from residential real estate over the last 4 to 5 years are returning to the sector.

Speaking of realty stocks, note that the realty sector was the top gainer last month. Have a look at the chart below:

The realty sector gained as much as 16%, followed by metal and IT sector with gains of 9.4%.

The government has been taking proactive measures in the form of moratoriums, tax cuts, construction premium cuts and project timeline deferrals, to help the recovery of real estate sector.

In August last year, the stamp duty rates were reduced from 5% to 2% till December 2020 and 3% till March 2021.

Maharashtra cabinet on January 6 cleared the proposal to reduce all premiums for on-going as well as new real estate projects by 50%, up to December 2021. The decision was taken after the recommendations of the Deepak Parekh committee.

The developers welcomed this strong decision of Maharashtra Government to boost real estate sector which generates maximum employment and had not seen pick up in sales for several years.

How realty stocks perform in the coming months remains to be seen. Meanwhile, we will keep you updated on the latest developments from this space.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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