MUMBAI: Boosted by strong buying in auto, banking & financial services and IT stocks, the sensex on Wednesday closed above the 39K mark after exactly six months. Despite a flat closing in the US on Tuesday night, in late rally the sensex closed 230 points higher at 39,074 points. So far this month, boosted by the highest net foreign fund flow in over a decade, the sensex is up about 1,500 crore.
The last time the sensex had closed above the 39K level was on February 27 this year, at 39,746. On the basis of investor wealth, however, BSE’s market capitalization now is about Rs 6 lakh crore more than what it was in late February: Compared to Rs 151.7 lakh crore then, the market cap now is at Rs 157.3 lakh crore, official data showed.
On the domestic front, finance minister’s statement that GST rate on two wheelers could be reduced from the current 28%, led to strong buying in two wheeler stocks. On the international front, prospects of economic stimulus in the Eurozone and some positive talks on US-China trade deals also boosted investor sentiment, brokers said.
According to Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services, in the near term, the market is likely to continue its positive momentum with more stock specific actions. “Strong global cues led by positive news flows around vaccine development and further ease in tensions between US-China, would support the positive momentum. However, intermittent profit booking cannot be ruled out which should be looked as buying opportunity as we maintain buy on decline strategy,” Khemka said. Investors would track monthly derivatives expiry (on Thursday) and a crucial speech by US Fed chairman late on Thursday.
Official data showed that FPIs have so far net infused nearly Rs 45,000 crore into the stock market, the highest in over a decade. The strong monthly flows have also turned the year’s net flows positive with the total currently at Rs 35,000 crore. On Wednesday, net FPI flow was a little over Rs 1,500 crore, BSE data showed.