Sensex, Nifty end at record highs as investors bet on economic recovery

Sensex tops February peak to settle at 52,232; Nifty closes at 15,690

The Sensex on Thursday hit an all-time closing high amid optimism surrounding the accelerated vaccination efforts and continuing decline in Covid-19 cases in the country. The benchmark index rose 383 points, or 0.7 per cent, to end the session at 52,232, surpassing its previous closing high of 52,154 on February 15.

The feat comes exactly a week after the Nifty50 index topped its February high. The index rose 114 points, or 0.7 per cent, to close at a new record high of 15,690.

India on Thursday reported 134, 154 new Covid cases, with the positivity rate staying below 10 per cent for the tenth day. The new cases remained below the 200,000 mark for the seventh day.

Analysts said that apart from the decline in Covid cases, the better corporate results and the Indian economy posting growth in the fourth quarter of 2020-21 (FY 21) had helped sentiment.

“The decline in cases is helping sentiment. In the March quarter, the corporate results were robust, and the economy also started growing in the fourth quarter. People needed validation that India is coming out of the trough. Everyone realises that May was a tough month, but now people are taking it in their stride and focusing on the economic recovery,” said Saurabh Mukherjea, founder and chief investment officer, Marcellus Investment Managers.

Investors are also hoping that the Reserve Bank of India’s (RBI’s) meeting on Friday would assure them of its commitment to providing adequate liquidity to help India tide over the impact of the second wave of Covid-19.

“All eyes would be on Friday’s monetary policy, wherein the RBI is expected to maintain the status quo on key rates. However, its commentary on growth and inflation would be closely watched by participants. We may see volatile swings during the day, so traders should plan their trades accordingly,” said Ajit Mishra, VP-research, Religare Broking.

The new highs by the indices come even as India’s manufacturing activity declined amid the onslaught of the second wave and subsequent restrictions. The monthly IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) survey showed that manufacturing PMI stood at a 10-month low of 50.8 in May, down from 55.5 in the previous month. Services PMI stood at 46.4 in May, down from 54 in April. A score below 50 indicates contraction.

Globally, equities were mixed amid concerns about stimulus reduction. However, key markets were hovering near record highs on the hopes of an economic rebound.  

Back home, the market breadth was positive, with 2,141 stocks advancing against 1,039 declining on the BSE. As many as 400 stocks hit their 52-week highs, and 502 were locked in the upper circuit. All the sectoral indices ended the session higher on the BSE. Consumer durables and realty stocks rose the most, and their gauges rose 4.4 per cent and 3.9 per cent, respectively. Titan was the best-performing Sensex stock and rose 6.7 per cent.