Markets made positive strides during the ceremonial muhurat trading session on Wednesday with the benchmark indices as well as the broader market gaining about two-thirds of a per cent. The Sensex gained 246 points, or 0.75 per cent, to close at 35,238. The Nifty50 index added 68 points, or 0.65 per cent, to end at 10,598. This was the biggest muhurat day gain for the benchmark indices in 10 years. All the 19 sectoral indices of the BSE ended in the green, with the auto index gaining most at 1.1 per cent. All Sensex components, barring Bharti Airtel and Axis Bank, ended with gains. Mahindra & Mahindra gained the most at 2 per cent, followed by Infosys and Tata Motors — each rising more than a per cent each.
Most global markets reacted to the US midterm elections. While Asian markets ended on a mixed note, US equity futures and Treasuries gained. Experts said the mid-term results were positive for emerging markets, as Democrats winning a majority in the House of Representatives would limit the prospects of a major fiscal initiative from President Donald Trump’s administration, which would have meant higher US yields and a strong dollar.
Widespread gains during the hour-long muhurat session kept the mood buoyant of those present at the BSE. Buying shares on muhurat day is considered auspicious by some market participants. Nirav Gandhi, 50, said he is more sanguine buying shares this year as the recent correction provides some valuation comfort.
“Last Samvat, I was a bit skeptical as markets had rallied quite a bit. This year, I am comfortable as stocks have come off sharply from the highs,” Gandhi said. He added he bought shares from the mid-cap universe. At Diwali, most players indulge in ceremonial purchases.
Institutional investors and brokers trade to price in global cues or key news developments, if any. The National Stock Exchange (NSE) clocked volumes of Rs 40 billion while the BSE reported volumes of Rs 4.5 billion.
Market returns in Samvat 2074 were underwhelming. The Sensex rose 7.3 per cent, while the Nifty50 index went up only 3.1 per cent. The NSE mid-cap and small-cap indices declined 8.5 per cent and 23.4 per cent, respectively. It was a wash out for small- and mid-caps that saw course correction after more than doubling in the last four Samvat years.
Most of the gains made in Samvat 2074 got wiped out in September and October, when the benchmark indices corrected nearly 15 per cent — their worst two-month performance since February 2016.
“The steep correction was mostly because of challenging global and domestic macro environment and global equity market corrections,” said Ravi Muthukrishnan, head of institutional research at Elara Securities. “We expect the market to rebound from the current levels because of valuation comfort, easing of crude prices, and pause in rupee depreciation.”
Brent crude oil prices have retreated 16 per cent from $86.1 per barrel on October 3 to $72.3 currently. The rupee too has strengthened to 73 from its record low of 74.4 against the dollar on October 9.
Nifty valuations have come off from nearly 19 times its estimated one-year forward earnings to about 16 times currently — its long-term trading range. The fall in broader market valuations has been even sharper. “On the valuation front, the market was neither expensive nor cheap. We expect the markets to remain volatile over the next one year. It is a good time for systematic investing,” said S Naren, chief investment officer, ICICI Prudential Mutual Fund.