Equities scale new highs on Q3 earnings, vaccine hopes, FII inflow

MUMBAI: The BSE Sensex continues its record run as it surged above the 49,000 mark on Monday amid incessant inflow of foreign institutional investments (FII), strong Q3 earnings and vaccine hopes. The Sensex touched an all-time high of 49,303.79 points. The Nifty50 hit a new record high of 14,498.20 points.

The recent surge in equities comes largely on the back of FIIs, as domestic institutional investors (DII) have totally averse to investments in the past few months and have pulled out money from the equities.

Net FII inflow on Monday was Rs 3,138.90 crore, while net DII outflow was Rs 2,610.13 crore. FII inflows for in 2020 stood at $23.4 billion, while DIIs recorded their first outflows of $4.9 billion after five years of inflows.

Another significant trend in the market amid the pandemic has been that millions of new investors have entered the country's stock markets, ushering in a massive buying spree. These newbie investors, have ventured into the market, via the Demat route.

As per recent SEBI data, close to 6.3 million (63 lakh) new Demat, or dematerialised, accounts have been opened during the April-September 2020 period, representing an increase of 130 per cent on a year-on-year basis.

Further, a recent report by ICICI Securities showed that Nifty50 has witnessed its fastest rally since financial year 2009-10.

The Nifty50 on the National Stock Exchange (NSE) has gained 86 per cent in the current financial year, the fastest rally since FY10 when it gained 103 per cent in a similar timeframe.

On Monday, the Nifty50 settled at new closing high of 14,484.75, higher by 137.50 points, or 0.96 per cent, from its previous close of 14,347.25 points

Sensex ended at its new closing high of 49,269.32, higher by 486.81 points, or 1 per cent, from its previous close of 48,782.51 points.

Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services noted that global cues were positive as investors are hopeful of a greater stimulus package in the US.

"On the domestic side, Nifty started the week on a strong note tracking robust results reported by TCS and Dmart and massive foreign fund inflow. IT stocks led from the front with Nifty IT index hitting fresh record high," he said.

He added that business activity has been picking up and the October-December earnings are expected to be better with pent-up demand and festive demand collectively boosting the corporate results. Further, sentiments were also buoyant following improvement in Covid-19 recovery rates and announcement of vaccination process from January 16.

Going ahead, investors would track Q3 earnings season which started off on a strong note and the vaccine rollout in India, along with the developments around US stimulus package, Khemka said.

Deepak Jasani, Head of Retail Research at HDFC Securities said that volumes on the NSE were on the higher side compared to recent averages.

Among sectors, IT, auto, FMCG and pharma were the main gainers while metals and PSU bank were the main losers, he said.

The top gainers on the Sensex were HCL Technologies, Infosys and HDFC, while the major losers were Bajaj Finserv, Bajaj Finance and Reliance Industries. (IANS)

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