 "Blue-chips hit record high amid 650-point Sensex rally")
Propelled by a strong up move in blue-chips ahead of exit poll results next week, benchmark indices – S&P BSE Sensex and CNX Nifty – rallied nearly 3% each on Friday to record their biggest single-day gain since September 2013.
After a muted start, the benchmark indices gained momentum during the session as they seemed to be pricing in a stable government. The S&P BSE Sensex gained 2.91%, or 650 points, to end at 22,994, while the broader CNX Nifty rose 2.99%, or 199 points, to end at 6,859 today.
And on a day when the markets were on a tear, the VIX also raced ahead by 11% to 38 levels, in what marks a surprising departure from the traditional inverse relationship between market direction and volatility index.
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Top draw
Reliance Industries (RIL), ICICI Bank, Mahindra and Mahindra (M&M), Axis Bank and Coal India from the BSE 30-share Sensex have hit their respective 52-week high.
Among other stocks, Hindustan Petroleum Corporation (HPCL), Engineers India, Gujarat State Petronet and Bajaj Finserv were among a total 154 stocks that touched one-year high in trade on Friday. Of these, Arvind, Bajaj Finance, Jammu and Kashmir Bank, Shriram City Union Finance and Eicher Motors hit their respective record high on the BSE.
The combined market capitalisation of companies listed on the BSE and the rose to Rs 76.43-lakh crore from Rs 74.90-lakh crore yesterday, making investors richer by over Rs 1.5-lakh crore.
Analysts suggest the rally could have been sparked by a recent interview of the National Democratic Alliance’s (NDA) Narendra Modi in which he exuded confidence that the BJP would win with a clear majority and form the strongest and most stable government since Rajiv Gandhi's time.
“The markets are rallying on anticipation of a favourable outcome on May 16. Despite the rally so far, most cyclical sectors are still trading well below their average valuations, and in a longer economic upturn scenario, valuations still leave enough room for healthy upside as GDP growth and consequently earnings growth in cyclical sectors continues to improve,” said Dinesh Thakkar, CMD, Angel Broking.
“I would recommend investors to continue investing in equities, as this is one of the best times to invest in this asset class,” he adds.
“Unmistakeably, the focus remains on May 16 when the election verdict would be announced. But even before that, the market would react to exit polls numbers as it starts trickling in once the final phase of polling gets completed by 12th May. Sector-wise, the market behavior was in line with pattern of past few weeks – cyclicals gained at the expense of defensives,” Sanjeev Zarbade, vice president- private client group research, Kotak Securities said.
Smart movers
Financials were in the limelight during the session. The banking index, S&P BSE Bankex, was the top gainer among sectoral indices that surged 5.3% by close of trade.
ICICI Bank surged 7% at Rs 1375, its highest level since 2008 on the BSE, to top the gainers list on the BSE. Shares of second largest private sector bank, in terms of market captialisation, touched intra-day high of Rs 1,388. The stock hit record high of Rs 1,465 on January 14, 2008.
HDFC Bank, YES Bank, Punjab National Bank, Axis Bank, Kotak Mahindra Bank and State Bank of India (SBI) were some of the other notable gainers.
Meanwhile, the 50-share CNX Nifty, the market price of 21 companies rose more than 4% today. The list includes State Bank of India, IDFC, Ambuja Cements, Hindalco Industries, ACC, BPCL, HDFC, Tata Power Company, UltraTech Cement, HDFC Bank and Maruti Suzuki India.
Wonderla Holidays had a spectacular debut, ending at Rs 157, up 27%, on the NSE. The stock had listed at Rs 160, a 28% premium against its issue price of Rs 125. It touched a high of Rs 168 and low of Rs 160. The Rs 180-crore public issue of amusement park operator Wonderla Holidays was priced at Rs 115-125 per share.
The coming week promises to be action-packed as investors have to contend with a slew of political news. Much will depend on the outcome of the exit polls given that the market’s rise in recent times has been attributed to expectations of the main opposition BJP likely to come back to power. The April CPI and March IIP data are scheduled to be released next week which would also influence the sentiment.