Sensex at sixty

MUMBAI: In November 2017, Ridham Desai, one of the top equity strategists at global financial major Morgan Stanley, told a business channel that he expected the sensex to touch the 100,000-point mark in 4-5 years. This was at a time when the index was hovering around the 33,500-level and almost every fund manager worth his roar was finding it difficult to make money on Dalal Street. Desai had said the Indian market was on the cusp of a big rally as the drivers for the same were in place.
Market players then were a divided lot on Desai’s comments. For most it was either an audacity of crystal gazing or temerity of stupidity. For a small lot, it was an expression of hope. But none could stick their neck out and support such a bullish call. Since memes were not in vogue then, Desai was spared from being trolled for his predictions.

Almost four years to the date since Desai made that prediction, as the sensex scaled the 60k mark in early trades on Friday, investors on Dalal Street now believe that the 1-lakh mark is within their reach. They also believe India’s market capitalisation could soon go above the $5-trillion mark, from about $3.6 trillion now, and front-run the GDP to hit that magic figure. They see a smooth glide path for the Indian market as several tailwinds are visible.
According to A Balasubramanian, MD & CEO, Aditya Birla Sun Life Mutual Fund, continuing flow of funds, sectoral rotation in the market and the gradual opening up of the domestic economy as we enter the festive season are helping keep the market’s momentum steady. The top fund manager, who manages about Rs 1.2 lakh crore in equity schemes, also feels that when interest rates go up, at least during the initial period, it’s a sign of return of growth in the economy. Of late there have been concerns among analysts and investors that when the US central bank starts raising interest rate from its current near-zero level, stock prices could correct.
On Friday, the sensex opened above the 60k mark at 60,159 points, up over 200 points from its previous close, scaled a life-high mark at 60,333 and closed at 60,048—a gain of 163 points. Driven by a statement from the chief of US central bank that indicated that easy money from the world’s largest economy would continue at least till mid-2023, investors globally pushed stock prices up. As a result, in two sessions, the sensex gained nearly 1,100 points. On the NSE, the Nifty gained 30 points to inch closer to the 18k mark as it closed at 17,853 points.
The rally in the last few months has been aided by a steady, though at times slow, rollout of Covid vaccines around the world. It’s also been helped by some shift of funds from China to India by global fund managers after the government in the world’s second largest economy cracked down on several large companies as it aimed towards more equitable distribution of wealth. In the last one year, most Indian companies have also been trying to reduce their debt, which has also helped the rally in the domestic market, dealers and analysts said.
The strong market rally in 2021 has also made investors richer by Rs 75 lakh crore with BSE’s market capitalisation now at Rs 263 lakh crore.
So far this year, the index has rallied from a sub-50k level to its current peak mostly on the back of strong buying in the top software majors (TCS and Infosys), the Bajaj and HDFC twins, Reliance Industries and Bharti Airtel. Lately, after being rangebound for most of these months around the Rs 210 level, ITC too has rallied strongly, leading to another meme fest about this Kolkata-based cigarettes-to-FMCG major.
On the sectoral front, stocks of metals and basic materials companies raced ahead of most other sectors. As the pandemic forced users of these ingredients to realise their excessive dependence on China and look for an additional source of procurement, companies from these sectors saw their fortunes turn, analysts said.
Foreign and domestic funds have also poured money into the stock market in 2021. While FPIs have net infused nearly Rs 65,000 crore, mutual funds have net bought stocks worth Rs 18,249 crore, official data showed.

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