New milestones for indices: Sensex climbs mount 41k, Nifty closes at 12,101

The benchmark indices marked new milestones on Wednesday with the Sensex closing above 41,000 mark and the Nifty logging new all-time highs after six months. Gains in index heavyweights amid sustained foreign flows have led to strong momentum in the market. Also, optimism over the US-China trade deal and benign monetary policy have helped global investor sentiment.  

The Sensex ended at 41,020, following a gain of 199 points, or 0.5 per cent. The Nifty added 63 points, or 0.52 per cent, to end a 12,101. Blue chip stocks including HDFC, Reliance Industries (RIL) and State Bank of India (SBI) led the market charge on Wednesday. Shares of RIL gained 0.7 per cent to end at Rs 1,570. The stock is just Rs 5,000 crore shy of Rs 10 trillion market-cap. Shares of SBI rose nearly 3 per cent after its credit card arm filed for its maiden offering.  Barring five stocks, all the Sensex components ended with gains on Wednesday. It has taken the Sensex 118 trading sessions to move from 40,000 to 41,000. The index had closed above 40,000 for the first time on June 3.  Since then, stocks have been on a roller coaster ride with global and domestic growth concerns pulling down indices sharply during the August and September period.  Foreign portfolio investors have pumped in over $6 billion (Rs 45,000 crore) in the last two months. 

The Sensex has rallied over 13 per cent during this period. Both Sensex and Nifty are back at levels seen six months ago. Several of its components have undergone a huge change in fortunes. Bharti Airtel, ICICI Bank, and Asian Paints have been the top gainers among Sensex components since June. On the other hand, Yes Bank, ONGC and M&M have seen a sharp decline in their stock prices.

“After the recent rally, the risk-reward for Indian equities appears evenly balanced. On the one hand, we expect a further deterioration in the growth environment to hurt corporate earnings, on the other hand, equity valuations could remain elevated given risk-on sentiments globally and expectations of further reforms by the government ahead of the Union Budget in early February,” says Jitendra Gohil, head of India equity research, Credit Suisse Wealth Management.