Equities rallied for the fifth straight session on Wednesday due to the rally in Reliance Industries (RIL) and strong global cues despite US President Donald Trump saying the fiscal stimulus might be rolled out after US elections. Additionally, positive pre-quarter updates on the domestic front added to the investors’ risk appetite.
The Sensex rallied 304.38 points (0.77%) to close at 39878.95 while the Nifty was up by 76.45 points (0.66%) to close at 11,738.85.
Foreign portfolio investors have turned buyers of Indian equities, pumping in $444.8 million so far in October. Provisional data show that they bought equities worth $148 million on Wednesday.
Shares of RIL rose 2.22% to close at Rs 2,259.4. The price reaction in the RIL scrip came after Abu Dhabi Investment Authority decided to pump Rs 5,512.5 crore into Reliance Retail in exchange for equity stake. RIL has been on a value unlocking spree in its subsidiaries Reliance Jio and Reliance Retail. The strong movement in the heavyweight propelled the markets higher, helping the Nifty reclaim the 11,700 mark. This means that the markets are now once again 5.1% short of its all-time highs.
Siddhartha Khemka, head — retail research, Motilal Oswal Financial Services, said: “Global cues were positive as investors shrugged off US President Donald Trump’s cancellation of negotiations on a new coronavirus relief Bill.
“On the domestic side, flattening out of Covid-19 active cases over the last two weeks, expectation over the economic stimulus from the government and positive corporate commentaries for September quarter kept sentiments high.”
The broader indices have started underperfoming the benchmarks in the last few sessions.
On Wednesday, the Nifty Midcap 100 and Nifty Smallcap 100 were down by 0.5% and 0.3%, respectively. According to experts, this is because traders and investors have turned cautious at the current levels on these indices.
Meanwhile, brokerages have pointed out towards improving economic indicators. Kotak Institutional Equities said in a report, “More than six months have elapsed since the announcement of the first lockdown. We take stock of the recovery in some of the key economic indicators. Electricity consumption, e-waybill generation and NETC FASTag transactions are back to pre Covid-19 level.
Railway freight volumes are also up y-o-y. However, other indicators like petroleum product consumption, job postings, port volumes and civil aviation are still well below their pre-Covid-19 levels.”
The future and options segment on the NSE saw a turover worth Rs 23.43 lakh crore and the cash market saw volumes worth Rs 53,732 crore.
This is against the six-month average of `16.78 lakh crore and Rs 56,614 crore, respectively.
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