Stocks on Monday cheered the scheduled roll-out of Covid-19 vaccines in the country by the end of this week and the strong start to the quarterly earnings season. The benchmark Sensex crossed the 49,000 mark for the first time, and is now within striking distance of the 50,000 milestone. The Sensex rose 487 points, or 1 per cent, to end the session at 49,269, while the Nifty closed at 14,484, a gain of 137 points, or 0.9 per cent. IT stocks were the top gainers and contributed the most towards the Sensex s gains. Indian stocks continue to be the beneficiaries of benign foreign portfolio investor (FPI) flows amid signs of recovery in the economy. FPIs bought stocks worth Rs 3,139 crore on Monday. Domestic institutional investors, on the other hand, sold shares worth Rs 2,610 crore.
What do you make of the rally so far?
The FPIs have been very active at least in the last quarter and a large part of the rally has been caused by the consistent FPI flows. We need to understand why the FPIs have been so excited about India especially in the last quarter. There are three primary reasons. One, the MSCI rebalance and the flow that followed. Part of the flow which we have seen till now is done and over with.
Two, the weaker dollar index. I do not think that is going to change dramatically going forward because we expect the dollar to continue to remain weak versus global currencies. As a result, we will continue to see some amount of inflows.
Global stocks tumbled on Monday amid panic selling as a new strain of coronavirus emerging from the UK led to fresh travel restrictions, casting a cloud over the prospects of economic recovery. The Sensex plunged 1,407 points, or 3 per cent, to end at 45,554 in its biggest fall in percentage terms since April, while the Nifty dropped 432 points, or 3.14 per cent, to end the session at 13,328. Monday s fall saw investor wealth shrink by Rs 6.6 trillion, based on the market capitalisation of all listed companies on the BSE. The new strain of the virus forced the UK government to impose fresh lockdown in London on Sunday, which requires more than 16 million Britons to stay at home. Moreover, many countries, including the UK s regional neighbours, suspended travel from the island nation. Experts warned that the new strain was 70 per cent more transmissible.
The domestic equity markets have seen an unprecedented liquidity gush, underpinned by the weakening of the dollar and aggressive monetary and fiscal stimulus undertaken by global authorities. Investments by foreign portfolio investors (FPIs) have topped the $20 billion mark the most since 2012 in dollar terms. Previously, India has had only two years 2010 and 2012 when foreign inflows have been greater than $20 billion. In local currency terms, at Rs 1.5 trillion, overseas investment into equities has surpassed the previous high of Rs 1.33 trillion in 2010. Interestingly, over $14 billion has flown into domestic stocks since November, propelling the markets by 18 per cent. The increase in the pace of foreign inflows has coincided with the US election results and talks among US congressional leaders for another stimulus deal. Also, the rapid progress on the Covid-19 vaccine front has further fuelled the optimism and raised hopes of the economy returning to normalcy by