Market experts are of the view that liquidity and investments from Foreign Portfolio Investors are reasons for the Sensex touching new heights.
With the Sensex touching 48,000 on Monday, the economy is showing signs of returning to normalcy. The equity benchmark Sensex gained 300 points on Monday and recorded a fresh high. Experts believe that liquidity and record number of investments from Foreign Portfolio Investors (FPIs) are the reason for Sensex touching new heights.
The Sensex has rallied for straight continuous nine days after it ended at 307.82 points higher on Monday at 48,176.80 and also reached a record intra-day peak of 48,220.47. Similarly, 50-share Nifty jumped 114.40 points to a lifetime high of 14,132.90 and also peaked intra-day high of 14,147.95.
Experts have said that due to liquidity, the markets have earned the trust of investors, both domestic and international. In nine months, liquidity has increased in the markets and investors are positive about the market. Ambareesh Baliga, a market analyst, told The Sunday Guardian, “A lot money came in the market in the last nine months because money is available at cheap rates globally. Investors have made money and it is the market tendency that when you earn, you tend to invest more. In the last couple of months, Foreign Institutional Investors are investing in stocks which are outperforming and the Indian markets have outperformed compared to global markets.”
Deven Choksey, Krchoksey Shares & Securities Pvt Ltd, told The Sunday Guardian, “Because of liquidity in the market, there is larger participation by foreign and Indian investors and that, in turn, has put additional funds into the market.”
He further added, “Indian markets continue to remain a favourable destination from the investment point of view and will attract more money into the market.”
According to the NSDL website, as many as Rs 1,03,156 crore have been invested in the Indian stock market in the last nine months.
Experts said that over 9 million investors have invested in the Indian markets and this shows that the confidence of the investors are on the higher side, and this has helped the market. Baliga said, “Over 9 million investors have showed their interest in the Indian markets in the last nine months. This has helped the indexes reach new heights.”
Baliga said: “In the short to medium term, the market will grow. But these are hot money and we are not sure when the reversal will happen.” He further said, “We are in a bubble situation and when it bursts, no one knows. The market will go up in the future days, but to what extent we do not know.”
Talking about the stocks that are expected perform well in the next six months, Baliga said that pharma and FMCG will continue its rally on the stock market. “Meanwhile, travel and tourism and real estate will be dark horse. People have been staying at home for the past nine months and with normalcy returning in the country, shopping spree will continue in India. India is a consumption country and FMCG products will be in demand in the country.”
According to Choksey, stocks across sectors will perform better as there is a favourable market sentiment. He further told The Sunday Guardian that the companies that have strong balance sheet and good financial muscle power will be experiencing growth.
Baliga said that by December 2021, the market would hover around 50,000 points. He said, “The market would cross 50000 points in the coming days, but I would not be surprised if the market falls below the current levels.”
Meanwhile, Choksey is a little optimistic about the market. He said, “It is expected that the market would record 15% year-on-year growth. I think the Sensex would cross over 52,000 points by December 2021.”