AUGUST 18, 2021
The market has been maintaining its northward journey in the current year, though there have been intermittent correction and consolidation.
But it has not seen any major correction or steep fall as, overall, the economy remained open in the second wave (though there were some restrictions by several states).
Further easing of restrictions by states, consistent buying by retail investors, low-interest rate environment and good earnings and economic growth have helped the Sensex and the Nifty climb several milestones in the last six months.
The BSE Sensex rallied from the the 50,000 levels on January 21, 2021, to the 56,000- mark today (August 18, 2021). It has taken seven months to rally 6,000 points. In the same period, the Nifty50 surged 2,111 points to hit a new high of 16,701 levels – also today.
If we take the data from the lows of March 2020, the market more than doubled or have risen 115 percent till now, also gaining confidence from increased pace of vaccination and ample global liquidity.
“The market has been consistently surprising even the incorrigible optimists, by setting new records. The Sensex has scaled the 56,000-mark this morning. It is interesting to note that the Sensex has multiplied 560 times since its inception, with 1979 as the base year. By averaging around 15 percent CAGR during the last 42 years, Sensex has rewarded long-term investors handsomely,” said Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Vijaykumar feels the present bull run is primarily driven by new retail investors.
Multi-baggers and 50% club
In the journey of 6,000 points to the 56,000-mark, 80 percent stocks in the BSE500 index closed in the green. Of these, 28 stocks provided multi-bagger returns.
Among them are Happiest Minds Technologies, JSW Energy, Balaji Amines, Gujarat Fluorochemicals, Adani Total Gas, Adani Enterprises, IIFL Finance, Lux Industries, eClerx Services, HEG, Adani Transmission, Tata Steel, Alkyl Amines Chemicals, JK Lakshmi Cement, BASF India, JK Paper, Intellect Design Arena, Graphite India, and KPR Mill.
These stocks rallied 100-273 percent in the seven-month period. Chemical, metals, graphite and technology stocks dominate the list.
Another 93 stocks surged more than 50 percent in the same period. They include Linde India, Balrampur Chini Mills, Gujarat Gas, HFCL, Persistent Systems, SAIL, Jindal Stainless (Hisar), Zensar Technologies, Cyient, Birla Corporation, UTI AMC, Orient Cement, Welspun India, Laurus Labs, Apollo Hospitals Enterprises, IRCTC, Gland Pharma, Computer Age Management Services, Tata Coffee, Gujarat State Petronet, NALCO, Indiabulls Real Estate, Vedanta, Hindalco Industries, JB Chemicals, Piramal Enterprises, Mindtree, KNR Constructions, Birlasoft, Equitas Holdings, Cummins India, Route Mobile, PNC Infratech, Tata Chemicals, ICICI Securities, Polycab India, Rossari Biotech, JK Tyre and Industries, and TeamLease Services.
Push towards 57,000 has strength
Experts largely expect the Sensex to surpass even the 57,000-mark soon, considering the momentum and support from retail investors, along with government support and easing of restrictions, going ahead.
“August is all about large caps after three months of under performance. The Sensex is likely to test the 57,000-mark while 55,800-56,000 is the intermediate support zone,” said Santosh Meena, Head of Research, Swastika Investmart.
Among sectors, metal was the biggest gainer, rising 70 percent, followed by IT and Power, which gained 27 percent each. Capital goods and healthcare indices rallied 20 percent each, while Bankex was up 10 percent in seven months.
“This year, the metal index has been the outperformer, followed by the Nifty IT index. But it is important to remember that even sectors with good earnings visibility, like IT and metals, are highly valued. Therefore, even while remaining invested in this bull market, investors have to be cautious while committing fresh funds,” said Vijayakumar.
The broader markets outperformed frontline indices in the same period, with the BSE Midcap index rising 20 percent and Smallcap index gaining 40 percent.
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