Domestic investors also cheered the 7 per cent fall — the biggest single-day drop in two years — in global crude oil prices, a key macro headwind for India.
The Sensex climbed 282.5 points, or 0.8 per cent, to close at 36,548, surpassing its previous all-time high of 36,283 on January 29. The Nifty50 index reclaimed the 11,000 mark, but closed 1 per cent short of its record high at 11,023. Both the indices logged their fifth straight session of gains, owing to advances in index movers such as RIL, HDFC Bank, and Tata Consultancy Services (TCS).
The broader markets, however, failed to extend their gains with the BSE mid-cap and small-cap indices declining 0.5 per cent and 0.1 per cent, respectively.
“Markets have crossed all-time highs on the back of global cues as well as a solid start to the earnings season with TCS beating expectations. We expect the markets to remain in a tight range with higher volatility, given the busy political calendar ahead. Our relative preference stays with large-caps because mid-caps are still trading at a premium to large-caps,” Gautam Duggad, head of research, Motilal Oswal Institutional Equities.
The recent gains have helped the Indian markets cement their place as the best-performing global markets this year. The Sensex rallied 7.6 per cent in local currency terms in 2018. However, owing to the weakness of the rupee, the index is flat in dollar terms but still better than most emerging market (EM) peers. which have yielded negative returns. The steep correction in EMs this year is on the back of offshore investors pulling out money amid rising dollar and bond yields.
In 2018, foreign portfolio investors pulled out $70 billion from EMs, with China alone seeing a sell-off of $37 billion. Foreign funds have pulled out only $800 million from India in 2018, while comparable markets such as Taiwan, Thailand, and South Korea have seen sell-off to a tune of $9.7 billion, $6.1 billion, and $3.7 billion, respectively.
“While most of the emerging and developed markets are struggling, the Indian markets have successfully climbed the wall of worry. This reflects the resilience of our markets and an inherent faith in the superior long-term fundamental story,” said Manish Gunwani, chief investment officer (equity), Reliance Mutual Fund.
India’s outperformance this year has been on account of gains in select index heavyweights and strong support buying from mutual funds (MFs).
In the 30-share Sensex, 17 stocks gave negative returns this year. A large portion of gains made by the Sensex were due to a rally in six key stocks: TCS, Infosys, Hindustan Unilever, RIL, HDFC, and HDFC Bank. All these stocks have a high weight in the index and hence have offset the weakness in shares of other companies like Tata Motors and Vedanta. Had the index been an equal-weight one, the Sensex would be trading 7.7 per cent lower.