Three days into August and bulls are stomping all over Dalal Street. Terrific Tuesday for traders saw a stupendous almost 900 points rally on the Sensex, while the Nifty crossed 16,000 levels. Benchmark indices recorded their sharped intra-day gains since May 21st. Slew of positive high-frequency data is bringing in cheer for investors. More and more states opening up for business as usual after a steady decline in India’s Covid-19 cases. Should we celebrate just yet and what is the road ahead for Indian markets? Here’s what various voices are saying on the rally.
FM: MARKETS DRIVEN BY EXPECTATIONS OF GROWTH
Nirmala Sitharaman, Finance Minister told parliament on Tuesday that the movement in stock market indices is driven primarily by expectations of future economic growth. She added that stock market volatility as represented by INDIA-VIX index has reduced considerably since March 2020. Stock markets are, therefore, likely reflecting the future growth prospects of the Indian economy given the support provided by the policy response of the Government. FM also said that the government, RBI, and SEBI are regularly monitoring the behavior of financial markets and take necessary measures to ensure the orderly functioning of the stock markets and maintain macro-financial stability.
THE FII VIEW
Adrian Lim from Aberdeen Standard Investments believes that the Indian Economy is undergoing a structural shift and the recent IPO Rush from online space is indicative of that shift. Lim sees opportunity in Indian banks like HDFC and Kotak, Software Companies and Consumer Stocks going ahead.
NILESH SHAH: ‘TRIVENI SANGAM’ OF FLOWS
Nilesh Shah, MD, Kotak AMC spoke to ET NOW on Nifty hitting 16,000 and he says Tech stocks will continue to outperform the market. The growth opportunity for tech companies seems to be stronger for some quarters to come. He adds that “Any market is driven by fundamentals, flows, and sentiment. From a flow point of view, we are seeing good flows from local as well as global investors. From the sentiment point of view, as the economy opens up and growth data comes positive, supporting sentiments and most importantly the corporate profitability growth throughout FY21. It is the “Triveni Sangam” of flows, sentiments and fundamentals which have pulled the market to peak 16000 on Nifty.
RALLY ON STREET: EDITOR’S TAKE
ET NOW’s Managing Editor Nikunj Dalmia says that the benchmark indices have remained rangebound since over a month now and all the trading action has shifted towards small and mid-cap stocks. He adds that institutional investors have been on the ‘SELL’ side in July and bunching up of IPOs is impacting market liquidity. He adds that most bankers are indicating that the worse is behind them and normalcy will return by the end of this quarter – all these multiple factors are adding to the buoyancy on street.
