As the week comes to a draw, astonishing news from Dalal Street floods the nation’s financial arteries. India’s foremost equity index, Sensex reported a sixth week of gain which. A success of this magnitude in terms of gains was last reported April 2019.
Taking a look at the data reveals that though the market closed today at a loss of 0.03% whereas the week saw an appraisal of 2.5%. NSE’s Nifty 50 spells the same story in terms of gains and losses both trading upwards of 70 on the relative strength index. This indicates that the gauges are overbought.
Researchers believe that this success comes from a variety of factors such as $ 294.7 million of Foreign investment as well as a new batch of first time investors emanating from decreasing returns from bank deposits and other asset classes. Long term safe investments like equity stocks are thus in much demand now.
The exuberance in the market led by initial positive indicators is mostly factored in and the next course of action should be a correction … We see investors booking profits on these gains, as reading between the lines of earning commentary, recovery may take longer.
– Umesh Mehta, Head of Research at Samco Securities Ltd.
Despite the rising new cases of coronavirus which in recent days have tallied up to a staggering 1.24 million active cases, equity demands remain stable as do 10-year benchmark government bonds at 5.80% with a slight dent in the forex market where INR lost 0.3% value to USD amounting to 74.97 INR per USD.
As far as individual stocks are concerned, Reliance industries reached a new high of ₹ 2,162.80 on the BSE. This pegs the market cap of Reliance Industries at ₹ 14 trillion amounting to upwards of 4% of entire BSE’s value. Strong positive repercussion was experienced by Mphasis which jumped a massive 14% at the end of Q1FY21 owing to a new $ 216 million deal.
All things considered, the overbuying bubble will continue sectoral growth and in the process promote the general index ratings as well.