The NSE Nifty Index, which soared 246 points to cross the 16,000 level on Tuesday, rallied another 134 points to 16,265.25 in intra-day trade.
Investors are buoyed by encouraging economic data that showed a recovery in the manufacturing sector index, higher GST collection and improved corporate earnings.
Why are the indices rising?
Progressive economic data indicates strong rebound from the impact of the second wave. All major domestic data like PMI index, GST collection, corporate earnings, export data etc favour a strong recovery. This has added euphoria in the domestic market reaching new highs, along with context to a drop in global risk after the accommodative monetary and fiscal policy announcements. A similar monetary policy is expected from the RBI policy meeting.
Will the bull rally continue?
While fundamentals of the economy remain strong, over the last few months the collections for banks and financial services companies have been closer to normal, and that has given additional comfort to the markets. Besides, management commentaries across the board suggest an improved demand environment post June 2021, led by the easing of restrictions, lower active Covid-19 cases and a pickup in vaccinations.
What are retail investors up to?
The Sensex journey past the 54,000 level has been led by the retail investors who allocated more into equities even as foreign investors sold stocks worth over Rs 10,000 crore in July.
Retail investors and mutual funds, flush with funds from NFOs, are driving this market without much regard to valuations, said an analyst. Having broken the 15,950 Nifty upper band decisively, sheer momentum may take the market higher. With institutional money pouring in, large caps are likely to outperform if the market continues its upward momentum.
But be cautious - Any bad news on the political or economic front may spoil the bull party. Retail investors should be very cautious while dealing directly in the stock market. They had burnt their fingers many times in the past
Social Plugin