India’s benchmark indices joined the “Santa Claus rally” in a record-breaking mood on Wednesday with the Sensex crossing the 72000- mark on brisk buying in metal, banking and auto stocks.
Both the 30-share gauge and the Nifty closed at lifetime highs following a global rally on expectations that the US Federal Reserve will start to cut rates sooner than expected sometime in March.
The gains also came after India’s current account deficit (CAD) fell to 1 per cent of GDP in the July-September quarter from 3.8 per cent in the year-ago period.
Gains in equities at the fag end of the calendar year or last five trading sessions are called a Santa Claus rally.
In India, stocks have been advancing for four straight sessions now: the Sensex on Wednesday opened on a promising note at 71492.02 and built on its gains to dash across the 72000-mark in the last 30 minutes of trade.
It touched a day’s high of 72119.85 and finally closed with gains of 701.63 points or 0.98 per cent at a historic high of 72038.43.
The NSE Nifty climbed 213.40 points or 1 per cent to finish at a new peak of 21654.75. During the day, it zoomed 234.4 points or 1.09 per cent to reach its all-time high of 21675.75.
"Domestic equities surged higher supported by positive global cues and a sharp decline in India’s current account deficit to 1 per cent,” Siddhartha Khemka, head - retail research, Motilal Oswal Financial Services said.
“Healthy macro data and rally in global markets helped the Nifty to reach new highs even in the holiday season. While the derivatives’ monthly expiry on Thursday may infuse some volatility, the undertone remains bullish with the market making steady gains in the last few weeks.’’
“The upbeat domestic market continued reaching a new record high and easily recovered the last week’s losses. This upward trend was predominantly supported by the Santa Claus rally in anticipation of early rate cuts by the US Fed and cooling global inflation,” Vinod Nair, head of research at Geojit Financial Services, said.
Provisional data showed FPIs as net sellers to the tune of Rs 95 crore on Wednesday.
Analysts said their participation is limited during the holiday season. It is expected to pick up strongly in the next year as risk-on assets such as equities are forecast to find traction ahead of the Fed cutting rates.
Market circles added that a resilient Indian economy and stable crude oil prices are likely to keep the momentum in favour of stocks in the short term although occasional profit booking or a correction cannot be ruled out.
The broader market, however, under-performed on Wednesday with the BSE midcap gauge rising 0.41 per cent, and smallcap index by 0.20 per cent.
