Benchmark indices the Sensex and the Nifty scaled new peaks on Tuesday and closed at an all time high – Sensex above 20,000 for the first time, while the Nifty at a record 6,097.
Frontline stocks ICICI Bank, Reliance, Bharti and HDFC were the most significant gainers to push the indices to higher level. The Sensex gained 1.81 per cent or 360.21 points to close at 20,290.89. Nifty gained 136.65 points to close at a record 6,097, after touching a high of 6,111.20 during the day. Sectoral indices BSE Bankex and BSE Realty were major gainers at 2.54 per cent and 3.04 per cent respectively.
Overnight cues from the US added fuel to the market momentum as hopes heightened about a 25-50 bps cut in interest rates by the US Federal Reserve. “We do not know what will happen tomorrow morning. I expect the markets to remain firm in the next one and half months,” said Gul Teckchandani, a market analyst.
Sanjay Sinha, chief investment officer at SBI Mutual Fund, said he anticipates a global rally following a rate cut. “November might have seen negative FII inflows, but once fresh allocations begin in January we should see positive flows,” he said. A half a per cent cut in US interest rates on September 18 resulted in a massive FII inflows of over $7 billion that led to a rapid rise in stock prices.
Analysts believe markets are headed higher and could test 21,000 or 23,000 levels before heading lower, though concerns remain about instability on the domestic political front and a sluggish US economy.