5 Reasons Why Indian Share Markets Closed at Record High Today

Fri, 4 Dec Closing

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Indian share markets extended gains as the session progressed and ended on a strong note.

The Sensex crossed 45,000-mark for the first time, as the RBI upgraded its GDP target for the current fiscal year and kept interest rates steady in the face of stubbornly high inflation.

At the closing bell, the BSE Sensex stood higher by 447 points (up 1%).

The NSE Nifty closed higher by 125 points (up 1%).

ICICI Bank and UltraTech Cement were among the top gainers today.

The SGX Nifty was trading at 13,329, up by 138 points, at the time of writing.

Both, the BSE Mid Cap index and the BSE Small Cap index ended up by 0.4%.

On the sectoral front, gains were largely seen in the banking sector, FMCG sector and telecom sector.

Market participants were tracking travel related stocks today. IRCTC share price zoomed 15% as covid vaccine related optimism continued to boost travel related stocks. Meanwhile, InterGlobe Aviation and SpiceJet also surged in the range of 5-10%.

Asian stock markets ended higher today. As of the most recent closing prices, the Hang Seng ended up by 0.4% and the Shanghai Composite ended up 0.1%. The Nikkei ended down by 0.2%.

US stock futures are trading higher today indicating a positive opening for Wall Street indices. Nasdaq Futures are trading up by 48 points (up 0.4%), while Dow Futures are trading up by 157 points (up 0.5%).

The rupee is trading at 73.79 against the US$.

Gold prices for the latest contract on MCX are trading up by 0.1% at Rs 49,344 per 10 grams.

To know more about gold, you can check out our detailed article on investing in gold here: How to Invest in Gold?

Here are Top 5 Factors Why Indian Stock Markets Rallied Today

Firm Global Cues: Global stock markets were buoyed today amid positive macroeconomic data flow from China, US stimulus negotiations, and developments on the Covid-19 vaccine front.

Vaccine News: Prime Minister Narendra Modi today said India's vaccination programme against Covid-19 would begin as soon as a go-ahead from scientists is given, and asserted that healthcare workers involved in treating coronavirus patients, frontline workers and old people suffering from serious conditions would be inoculated on priority.

In his closing remarks at an all-party meeting with leaders of various political parties to discuss the pandemic situation, Modi said experts believe the wait for vaccine will not be long and it may be ready in a few weeks.

Bluechips Continue Momentum: Indian share market ended at record highs as bluechip stocks including Asian Paints, Mahindra and Mahindra, Maruti Suzuki, Tata Steel, Tech Mahindra, Titan and UltraTech Cement hit their fresh 52-week highs.

Revised Growth Prospects: The RBI revised its forecast of economic growth for the current fiscal year (2020-21) to minus 7.5% compared to its earlier forecast of minus 9.5%.

Banking Stocks Rally: the Nifty Bank index rose 2.3% to cross the 30,000-mark. Banking stocks gained after RBI announced to keep system liquidity in surplus.

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 stock markets, the past month was a staggering one. Benchmark indices saw huge buying interest and went on to touch record-high levels.

The BSE smallcap index was up 13% in November.

The BSE smallcap index has risen more than 10% in a month only 6 times in the last decade.

Foreign investors (FIIs) invested a net amount of around Rs 650 bn in November. This is the biggest purchase by FIIs by a big margin so far.

Will this rally in Indian share markets continue in December?

We reached out to Brijesh Bhatia, our new team member and Research Analyst of Fast Profits Reports, for his view on the Indian stock markets.

Here's what he had to say...

• The bulls celebrated Diwali with fireworks and started Samvat 2077 with a roar.
  
  The Nifty gained 11.4% in the month of November. 80% of the trading days ended on positive note. Midcap and Small Cap indices gained 15.5% and 13% respectively.
  
  We had 20 trading days in November 2020. 16 of them ended on positive note with 8 straight days of gains from 2nd to 11th November.
  
  The Nifty has now turned positive for CY2020 and has hit a new all-time high of 13,145.85.
  
  All sectorial indices ended on a positive note for the month.
  
  Metals (24.84%), Private Banks (24.25%), PSU Banks (23.63%), and Financial Services (22.84%) gained more than 20%.
  
  Sectors like IT (4.05%) and Pharma (5.30%) which has outperformed in the first leg of rally, were the underperformers.
  
  The stocks in Nifty 200 were on fire too. Out of 200 stocks, 179 ended on a positive note which means 90% stocks were in green zone.
  
  The broad-based buying indicates the momentum is still in the bull's favour. Entering the month of December, can this momentum prolong?
  
  Well, if we look at the seasonality chart for Nifty 50, December tends out to be the best month for bulls with an average return of 3.43% since 1996.
  
  Hope we have a Santa rally this Christmas too and end the pandemic year near all-time high levels!

You can read Brijesh's detailed profile here.

And in case you missed his first Equitymaster video, you can watch it now.

In latest developments from the IPO space, the initial public offering (IPO) of quick-service restaurant (QSR) chain Burger King India continued to get a strong response.

At the time of writing, the public issue was subscribed 139 times. The issue has received bids for 10,380 million equity shares against an offer size of 74.4 million shares, data available on the exchanges showed.

The portion set aside for retail investors has been subscribed 66 times, while the portion set aside for qualified institutional buyers and non-institutional investors has been subscribed 67.3 times and 331 times, respectively.

To know more about this IPO and our view on it, you can check our IPO note on the same here: Burger King IPO: Should You Subscribe to This QSR Chain Business?

In news from the banking sector, the Reserve Bank of India (RBI) maintained benchmark rates at the same levels of 4% in its policy meet today. The reverse repo rate stays at 3.35%.

Today's was the third meeting on run that the central bank chose to keep the rates unchanged.

Shares of interest rate sensitive sectors, mainly financials and automobiles, were trading firm after the RBI's decision to keep interest rates unchanged.

The RBI maintained the status quo on the benchmark lending rates in view of persistently high inflation and a lower-than-expected contraction of the economy.

Here are the key highlights from today's monetary policy:

The RBI revised its forecast of economic growth for the current fiscal year (2020-21) to minus 7.5% compared to its earlier forecast of minus 9.5%. RBI governor Shaktikanta Das said the change in forecast has been prompted by a surge in demand in both rural as well as urban areas.

The second half of the fiscal year is expected to show positive growth despite disruptions caused by coronavirus pandemic, he added.

Das said that retail inflation is seen at 6.8% in third quarter, at 5.8% for Q4FY21, and 5.2-4.6% in H1 FY22.

RTGS system to be made 24X7 in next few days. From January onwards, the limit for contactless card transaction will be upped from Rs 2,000 to Rs 5,000 per transaction.

Regarding NBFCs, Das said a regulatory framework review is needed. Das also committed to do whatever is required to maintain stability of the financial sector. Near-term stability issued has been handled, he added.

Note that the central bank has slashed the repo rate by 115 basis points since late March to cushion the shock from the Covid-19 crisis and sweeping lockdowns across the country to check its spread.

Moving on to stock specific news...

Axis Bank was among the top buzzing stocks today.

The government sold some of Specified Undertaking of The Unit Trust of India's (SUUTI) stake in private lender Axis Bank last week, data released on BSE showed.

SUUTI offloaded 36,25,075 shares of Axis Bank between November 26-27, bringing its stake in the lender down to 4.12% from 4.24% earlier.

The transaction, carried out without a formal announcement, came to light only this week. Market players said the government should pursue the same strategy for selling shares in listed PSUs.

Note that earlier this year in May, the government had decided to sell the remaining stake in companies held under SUUTI.

It had expected to raise around Rs 220 billion by selling its then 7.93% and 4.6% stake in ITC and Axis Bank, respectively.

Axis Bank share price ended the day up by 2.2%.

Speaking of the banking sector, note that the sector was one of the worst affected sectors in the Indian stock market when Covid-19 struck.

Banking stocks were severely punished. No investor wanted to touch them even with a 10-ft pole.

However, sentiment have changed now as investors are chasing banking stocks like never before.

Have a look at the monthly returns of major sectors for the month of March and October 2020 in the chart below:

Banks were among major losers with a cut of 34% in the month of March. Cut to October, they are the biggest gainers for the month with more than 11% returns!

We are closely tracking this sector and will keep you updated on all the top news from this space. Stay tuned.

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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