MUMBAI: The markets extended their spectacular rally for the second consecutive day as better than expected corporate earnings growth, prospects of a above normal monsoon and rise in crude oil prices boosted risk appetite among investors. The Sensex scaled above the psychological 26,000 level mark soaring 485.51 points or 1.88 per cent to end the day at 26,366.68 point. Investor wealth surged by over Rs 2.69 lakh crore in three days, with the Sensex gaining over 1,100 points.
The 30-share index ended the day at 26,366.68, a sharp rally of 485.51 points or 1.88 per cent — nearly a seven-month high. In three trading sessions, the index has gained 1,136.32 points. Consequently, the market capitalisation of BSE-listed companies surged Rs 2,69,402 crore to Rs 98,11,322 crore. According to stock market dealers fresh buying in capital goods stocks following a better than expected earnings numbers from L&T and short covering in the derivative sector helped the market to move higher.
“While the prospects of above normal monsoon has lifted investor sentiments, good set of numbers from L&T has renewed hopes about a speedier economic growth recovery,” said Uday Narayan Dubey, vice-president, wealth management at Value Plus. While the shares of L&T vaulted 14 per cent, BHEL climbed 4.73 per cent on Thursday. “Earnings growth will be the major driver of market going forward. Earnings growth has been subdued for the last three years and is now expected to revive in FY17,” said Motilal Oswal, chairman and managing director, Motilal Oswal Financial Services.
“The Nifty has crossed the important level of 8,000, which was acting as an impediment over the last six months. Global market rallied amid the rise in oil prices due to the drop in US crude inventory and signs of economic stabilization. Global investors are positively eyeing the US Federal Reserve chairpersons speech & US GDP data tomorrow, which will improve the prospects for Fed rate hike,” said Vinod Nair, head of research, Geojit BNP Paribas Financial Services.
“This move does appear to have been coming for the last couple of weeks, the question now is whether it can establish itself in a new range between $50 and $55,” said Craig Erlam, senior market analyst at OANDA. “While supply disruptions are likely to continue to support prices for now, a further strengthening in the dollar over the next couple of months could act as something of a counterweight and keep prices in check.” Another key driver in markets recently, which is likely to remain so over the coming few weeks, is the question of whether the US Federal Reserve will raise interest rates again at its next policy meeting in June — especially in the backdrop of better house sales.
