4 Reasons Why Sensex Rallied 529 Points Today

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Extending gains to the third straight day, Indian share markets witnessed positive trading activity throughout the day today and ended close to their record highs.

With the past three day's gains, benchmark indices recovered all losses sustained at the beginning of the week.

More than 200 stocks, including Asian Paints, Bajaj Auto, Infosys, Kotak Mahindra Bank, Nestle India and TCS, hit their 52-week high on BSE.

At the closing bell, the BSE Sensex stood higher by 529 points (up 1.14%).

The NSE Nifty closed higher by 148 points (up 1.09%).

Axis Bank and Sun Pharma were among the top gainers today.

The SGX Nifty was trading at 13,812, up by 199 points, at the time of writing.

The BSE Mid Cap index ended up by 0.1%, and the BSE Small Cap index ended up by 0.6%.

On the sectoral front, gains were largely seen in the banking sector, finance sector and energy sector.

Asian stock markets ended higher today. As of the most recent closing prices, the Hang Seng ended up by 0.2% and the Shanghai Composite ended down 0.6%. The Nikkei ended up by 0.5%.

US stock futures are trading marginally higher today indicating a positive opening for Wall Street indices. Nasdaq Futures are trading up by 17 points (up 0.1%), while Dow Futures are trading up by 87 points (up 0.3%).

The rupee is trading at 73.51 against the US$.

Gold prices for the latest contract on MCX are trading down by 0.1% at Rs 50,107 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 4 Factors Why Indian Share Markets Rallied Today

Brexit Deal: News that a Brexit trade deal was imminent boosted global sentiment. Britain and the European Union were on the cusp of striking a narrow trade deal, media reports said.

Firm Global Markets: European stock markets rose today with Britain and the EU finally expected to announce a post-Brexit trade deal. Sterling was up around half a percent against the dollar and euro in early London deals.

Macro Data: Data on Wednesday showed the number of Americans filing first-time claims for unemployment benefits unexpectedly fell last week.

Recovering Economy: The monthly bulletin of the RBI for December said that more evidence has emerged since the last bulletin which shows that the Indian economy is coming out of the Covid-induced slowdown.

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, note that since the lows in March 2020, the smallcap index has gained more than 80%.

While caution is indeed warranted, Richa Agrawal, Research Analyst at Equitymaster, thinks there is still a lot more steam left to this smallcap rally.

Here's what she wrote in a recent edition of Profit Hunter...

• For one, the gap between Sensex and smallcap index is still huge.
  
  In January 2018, the smallcap to Sensex ratio was 0.57 times, versus a long term average of 0.44 times.
  
  At present, this ratio stands at 0.37 times, well below the long-term average.
  
  The possibility of a convergence between growth and value is a lot higher in the smallcap space, than in the large caps.
  
  And then here are some other interesting facts.
  
  Historically, the smallcap index, after a sharp correction, has risen up to 300%.

The above observations have served Richa's smallcap service Hidden Treasure well. Her first batch of essential stock recommendations have offered robust returns so far, as can be seen in the chart below:

While the margin of safety in valuations has come down in these stocks, Richa has recently added another stock to this list.

This company is the world's largest player in a niche segment and its product falls in the essential category. This global leader enjoys unique competitive advantages that are hard to replicate by its peers.

If you are interested in knowing more and in becoming a Hidden Treasure subscriber, here's where you can sign up.

In latest developments from the IPO space, shares of Mrs Bectors Food Specialities made a strong debut at the bourses today with stock of the biscuit and bread manufacturer listing at Rs 501, a 74% premium against its issue price of Rs 288 per share.

A minute into the debut, Mrs Bectors Food share price surged to its maximum upper limit of 20% at Rs 601.20, rising more-than-double the issue price.

The IPO of Mrs Bectors Food Specialities received huge response with public issue garnering 198 times subscription and generated bids worth more than Rs 400 billion.

The high net worth individual (HNI) portion saw 620 times more demand than shares on offer. The qualified institutional buyer (QIB) portion was subscribed 177 times and retail category saw nearly 30 times subscription.

In news from the commodity space, crude oil prices extended gains in light holiday trade as a drop in US stockpiles spurred demand hopes.

Brent crude futures rose or 0.3% to US$ 51.37 a barrel, while US West Texas Intermediate (WTI) crude increased 0.2% to US$ 48.22.

US crude inventories fell by 562,000 barrels in the week to December 18 to 499.5 million barrels, the Energy Information Administration said on Wednesday.

Gasoline stocks fell by a surprise 1.1 million barrels to 237.8 million barrels, the EIA said, while distillate stockpiles fell by a more-than-expected 2.3 million barrels to 148.9 million barrels.

Crude oil prices also drew support from news that Britain and the European Union were on the cusp of striking a narrow trade deal.

Speaking of crude oil, in his latest video, India's #1 trader Vijay Bhambwani talks about a recent geo-political event which will cause a lot of volatility in the price of crude oil.

Vijay shares in detail all you need to know about this event and when you can expect the next crude oil trade.

Tune in here to find out more:

Moving on to stock specific news...

BEML was among the top buzzing stocks today.

BEML share price gained as much as 11% today after reports stated that the government's disinvestment process is coming back online.

As per reports, over the next few weeks, the department of investment and public asset management (DIPAM) will finalize the process of strategic sale of several public sector undertakings (PSUs) including BEML, India Tourism Development Corp (ITDC) and Central Electricity Corporation.

The core group of secretaries on disinvestment (CGD) is to meet on December 28 to finalize the sale of defence PSU BEML, formerly Bharat Earth Movers.

During the meeting to be held under the chairmanship of the cabinet secretary, preliminary information memorandum (PIM) and expression of interest (EoI) to invite bids are likely to be finalised.

The cabinet has already approved the strategic sale of BEML by divesting 26% of the government stake. At present, the government holds 54% in the defence public sector undertaking.

After getting approval from the alternate mechanism, an expression of interest will be issued.

Another meeting is planned for December 30 during which the sale of ITDC-owned The Ashok hotel in New Delhi will be taken up.

How the above divestment process pans out remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

Note that Prime Minister Narendra Modi's administration is relying on non-tax revenues as the coronavirus-induced lockdowns threatens to push the economy into a historic contraction.

The government seeks to raise a record Rs 2.1 trillion (US$ 28.5 billion) from asset sales in the current fiscal year to March.

With big ticket divestment plans hit by the Covid-19 pandemic, the government is readying public-sector companies for minority stake sale in the remaining months of current fiscal.

The government has raised Rs 61.3 billion by selling minority stake in Hindustan Aeronautics and Bharat Dynamics through offer for sale (OFS). The government also divested 15.2% in Mazagon Dock Shipbuilders through an initial public offering.

The government has already invited bids for Bharat Petroleum Corporation (BPCL), Air India and Shipping Corporation of India.

So far, DIPAM has raised Rs 263.64 billion. Of this, Rs 126.7 billion has come from disinvestment, Rs 13,696 from dividend and Rs 109.9 billion from Bond ETF.

How all this pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.

And 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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