The National Stock Exchange's benchmark Nifty50 index hit a fresh record high on Sept 18, while the BSE Sensex also surged to a six week high, tracking gains across global markets, as tensions over North Korea's missile tests eased at the start of the week and the US Federal Reserve is expected to announce measures to trim its balance sheet.
The NSE Nifty50 closed up 68 points or 0.7 per cent at a new high of 10153.10 points. The 30-share BSE Sensex rose 151 points or 0.5 per cent to 32423.76. The Nifty's previous closing high was 10114.65, a level it had reached on August 1, 2017. The Sensex had earlier hit a record high of 32686.48 on August 2, 2017.
“Continued inflow in domestic funds, benign interest rate environment, stable currency coupled with favorable global cues is driving markets higher. Anxiety in global markets over North Korea has tapered off,” said Gautam Duggad, head of research at Motilal Oswal Financial Services.
Selected automobile, pharmaceutical and banking stocks were among the major gainers in Sept 18 trade. Bajaj Auto was the highest gainer in the Sensex, the stock rose over 3.5 per cent.
Among other major gainers, Hindustan Unilever surged nearly 3 per cent, Larsen & Toubro and Coal India rose close to 2 per cent and Cipla, Dr Reddy's, Tata Motors, Axis Bank and Kotak Mahindra Bank rose 1 to 2 per cent.
All major stock markets in Asia closed sharply higher, Hong Kong's Hang Seng, Singapore's Straits Times Index and South Korea's Kospi rose 1 per cent, Japan's Nikkei stock average also gained 0.5 per cent. Most European stock markets were also trading higher.
“Nifty crossed all time high mainly aided by favourable macro scenario, continued flow of easy money, healthy inflows into mutual funds through systematic investment plans (SIP) and policy reforms,” said Rakesh Tarway, head of research at Reliance Securities.
Over the last 12 to 18 months, mutual funds have seen a surge in inflows from retail investors. In August, equity mutual funds registered record flows of over Rs 20,300 crore, even as there has been some pull back from foreign institutional investors.
Tarway believes that with the impact of the Goods and Services tax (GST) roll out waning, the corporate earnings should improve in the second half of the financial year, and expects markets to rally a further 4 to 5 per cent by December 2017.
However, some analysts also remain concerned over valuations.
“While valuations are not euphoric, they are rich versus long period averages and therefore support from earnings pick up is critical to sustain these valuations, going forward,” said Duggad.
He said that one would rather invest in large caps over mid-caps given the valuation gap now and stocks preferred would be the ones having visible earnings.
Bank of America Merrill Lynch too has stuck to its Sensex target of 30000 for December 2017, stating valuations are far higher than average.
